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No Experience Necessary

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Jerry Arndt was good at making air conditioners. Very good. In fact, he had several offers to rise through the corporate ranks at American Standard, the owner of Trane Commercial Systems, where until about two years ago Arndt was vice president of chiller operations in Lacrosse, WI. So why does he now hang his hat nearby, but a world away, as senior vice president of business services at Gundersen Lutheran health system?

“Jerry had a long and successful background in being able to do two of the most important things that healthcare has to do to deliver on its promise: improving quality while decreasing the cost,” says Jeff Thompson, MD, chief executive officer and chairman of the board of Gundersen.

So that explains why Thompson wanted Arndt to join the wide-ranging organization as director of business services, which includes one of the nation’s largest multispecialty group practices as well as hospitals and other ancillaries like home care and nursing homes, among others. But it doesn’t explain why Arndt wanted to come to Gundersen.

“I got a little more than I expected in terms of challenge, but I couldn’t think of a way I could have made a bigger difference for this organization and this community and potentially for healthcare in this country,” he explains.

What outsiders bring to the table

Arndt may be at the forefront of a new trend in healthcare: recruiting experts from other industries to help re-engineer wasteful processes, which in turn reduces costs and improves quality. Unlike Gundersen’s example, much of the hiring in this process engineering area comes from below the executive ranks, says Michael Rowe, vice president of finance and chief financial officer at Sisters of Charity of Leavenworth Health System in Lenexa, KS.

But things may be changing, especially in the medical group practice arena, where physicians’ motives are more closely aligned with those of the overarching organization.

“Manufacturing knowledge may enhance workflow in healthcare,” says Craig Goodrich, chief financial officer at Virginia Mason Medical Center in Seattle, which has heavily invested in so-called “lean” manufacturing techniques to improve efficiency in its organization. The manufacturing environment tends to provide more standards and deals with the exception, while healthcare tends to assume 100 percent exceptions and assumes one cannot apply manufacturing techniques to healthcare processes, Goodrich says. “So the person with the non-healthcare background may bring a set of new eyes and ask why non-healthcare techniques cannot be used for improving healthcare.”

Unusual structure

Back at Gundersen, Arndt reports directly to Thompson; there’s no CFO in the traditional sense. He works with an executive director of finance, says Thompson, who performs much like a traditional CFO in the accounting skill set. But “Jerry’s ultimately responsible for the financial end of the organization,” Thompson says. “What I need from him as the head of business services is to look at how finance relates not just to the numbers but to overall corporate strategy—how we relate to the external world in our facilities and operations.”

For his part, Arndt was under no illusions when he signed on at Gundersen in summer 2005 with such broad responsibilities. In fact, the challenge at times was overwhelming, Arndt says. Understanding the financial workings of the organization, the complexity of the reimbursement, the myriad insurance arrangements Gundersen deals with, was difficult.

“As you look at what you get paid for the same kind of services depending on the payer, it’s just very unconventional wisdom that you have to develop that was not a carryover from my experience in the manufacturing world.”

Found in translation

Responsible for multiple plants in at least three different countries while at Trane, Arndt is an expert at eliminating waste in processes and materials—but he’s a newbie to healthcare and approaches his position at Gundersen with humility.

Where Arndt is invaluable, says Thompson, is not only in his gentle approach with clinicians, but also in his experience in dealing with healthcare costs from the other side. Where he can add value is by speaking to employers in their own language and translating between healthcare’s insistence on 100 percent variation and other industries’ contention that most waste can be eliminated, thus saving costs.

“In two years in healthcare I’ve met more smart people than I’ve run into in my entire working career. They’re really independent, and thank goodness for that because you have to be really creative and innovative with how you deal with problems in each human body,” Arndt says. “But a fair amount of what is done in healthcare does lend itself to standardization.”

For example, one of Gundersen’s more successful lean projects dealt with the interaction between its central supplies group and the OR. Surgeons’ kits were filled with items that were either never used or used by one surgeon but not another. After a surgery, all items went back through sterilization and inventory, and “then the next time that procedure was called for that stuff came back and went through the whole process again,” Arndt says. “It was a complete waste. After cleaning up the ordering system and figuring out what each surgeon wanted for each type of surgery and squaring those preferences with the central supplies group, we got to the point recently where we documented 100 percent accurate trays that delivered exactly what the surgeons needed.”

Don’t become one of us too fast

Perhaps thanks in part to the fact that physicians’ interests are aligned closely with those of the institution, Arndt’s efforts are not only appreciated by the clinicians—they’re encouraged.

Arndt relates a story from the beginning of his tenure at Gundersen. “My partner, the senior director of clinical operations, once said, ‘All the people who work here should be here for one of two reasons. They should either provide patient care or provide a service to those who provide patient care.’”

Arndt says he thrives on that service mentality in Gundersen’s business services operations. When he first joined Gundersen, Arndt says, “I was somewhat apologetic about not having a healthcare background and not knowing all the idiosyncrasies that go on in the business, but several of the docs told me, ‘Don’t become one of us too soon. You bring perspective; you ask questions that you ask because of your lack of being drawn into how we’ve done things forever.’”

So Arndt continues to walk a fine line of trying to stay fresh and bring that manufacturing perspective as he’s gained experience in healthcare. “I have to work both sides of the fence on that.”

Philip Betbeze is finance editor with HealthLeaders magazine. He can be reached at pbetbeze@healthleadersmedia.com.