How a CEO Rose from Crab Cannery to Baldrige

Katherine Gottlieb's obsession with efficiency was the fuel she used to vault herself from a minimum wage future with no high school diploma to running the largest native-owned nonprofit healthcare organization in Alaska.

An oddsmaker in Las Vegas would have given astronomical odds that Southcentral Foundation, an Alaskan healthcare and wellness services provider led by a female Alaska native who entered the work force without a high school diploma, would win a prestigious national quality award.

That same oddsmaker might have given similar odds to the prospects of that young woman winning a Macarthur Genius award.

Yet those things happened.

Southcentral Foundation won the Baldrige National Quality Award in 2011, putting the organization in a select company of fewer than 20 healthcare organizations that have won the award since 2002. In 2004, Gottlieb was named a Macarthur Fellow. But starting there means coming into the story in the middle of an almost unbelievable arc that mimics that of its president and CEO, Katherine Gottlieb.

She was born and raised in a rural area off Kodiak Island, where as a child her only local healthcare resources were a midwife and a visiting public health nurse. Gottlieb rarely saw a family care provider. The municipality that was closest had one doctor, "but it cost money, so we didn't see that doctor very often," she says.

I wanted to try to understand how other organizations could learn and improve by adopting parts of what Gottlieb and her leadership team pioneered as the Nuka System of Care. The Nuka system is tough to define, but without it, neither Gottlieb nor Southcentral would have flourished so exceptionally.

The story of Nuka is not the story of the health system or Gottlieb, primarily. It's the story of a group of people experiencing broadly a healthcare crisis, and a group of visionary leaders' successful attempt to help solve it by learning what their patients wanted and needed.

Following is a recent conversation, edited for brevity, between Gottlieb and myself, about how she and her team not only improved the health of Southcentral's patients, but also how the cost of treating them was cut.

HLM: You dreamed of becoming a CEO, but your dreams weren't always so big. What was your first experience with work?

Gottlieb: While I was growing up I worked all kinds of odd jobs. I wasn't looking for a career, I just worked to support my family and my siblings and when I got married contributing to raising my children. I started working in the crab cannery. But I couldn't just the do the work the way someone directed me to do it.  I would start organizing things and looking at efficiencies in ways we could improve on packing crab. I wasn't required to do it, just wanted it done quicker.

As a result, they would move me around because I would stack up and do it too fast, waiting for everyone to catch up. Finally the office caught eye of me, and they brought me in to learn bookkeeping skills. When I came to Anchorage, I worked in the office at the canneries. I worked in personnel and hopped around to other areas. I was just interested in different aspects of work. Then I started having children.

HLM: So did that put your aspirations on a back burner, so to speak?

Gottlieb: I really wanted to support the family with only part time jobs. But my spouse at the time wanted to go back to school, so I said I would do full time work. I came to Southcentral Foundation [and] they asked my skills, and I said I wanted to be a CEO. They kind of laughed me out of the agency.

I had been a city council member and on local boards, but I had never gone back to school. Eventually, I got my GED [and later a BA and MBA from Alaska Pacific University and an honorary doctorate]. At the time I told [Southcentral] I wanted to be a CEO, I was working toward an associate's degree. I had the skills [to be a] receptionist at Southcentral, so I did that. But I also started reading everything I could get my hands on having to do with budgeting and what the organization could be. At that time it had 24 staff with a budget of $3 million. [Today it employs 1,800 and has a budget close to $242million.]

Four years later, I became the CEO. I did go back to that person who had laughed when I told her about wanting to be CEO. We both kind of laughed together.

HLM: What was it about Southcentral's situation that put a focus on wellness and holistic care from the start?

Gottlieb: We grew the organization looking at it as a family atmosphere, focusing on the needs of the community at the time. In the late '90's, there were many issues happening with Native American population. We did a needs assessment and a survey to determine top priority needs.

We already knew through our governance and leadership that Alaska native people looked like we were the population with near the largest shares of homelessness, people in the prison system, alcoholism, and behavioral health issues just to name a few. So even prior to the survey, we saw social problems and stigma around being Alaska native. So the push toward wellness was a natural.

What jumped right off the page is the need to address wellness from community aspect. So our system needed to be big and needed to involve the population that we are going to serve, and make sure they got involved with the wellness movement, whatever that ended up looking like.

A federal law was passed that allowed us the right to take over the [Alaska Native] Medical Center in Anchorage (from federal ownership). We felt it was extremely important to give the community that ownership. When we got control of the funds, we addressed the needs of the community. Wellness happened with employees first.

HLM: It seems this wellness approach is something other health systems could and should emulate, especially those that are being moved toward a more capitated system of care, as you are.

Gottlieb: People ask us all the time, "Your population is different. How can we duplicate what you're doing?" We're not so different. If you base your services on who you're serving and find out what they want and what they need, they become your customer. Even better is if you involve them somehow in the governance and as more than an advisory group.

In fact we don't call them that. For instance, the elders council is empowered to advise the leadership team and we listen to them. You know that movie 'Big,' where the kid became the [toy company] vice president? That 13-year-old knew best what kids would like. I think that's how we did it. We listened to groups of people and asked them what to do. And we still do that today. The customer becomes the customer/owner.

Previous to the ownership transfer, when we entered into this system, we were all treated like cattle, primarily because we all entered through the ED. There was herding and complaining and people were miserable. Everyone was coming through this one gate. And there was not enough money to spread back around to other parts of the system. We'd bill for the care and return revenue into the [federal] treasury.

Now, we put all the money back into the system, and we've built a primary care-based infrastructure where people don't feel like cattle or numbers. How did we change that attitude? There was this thought that if we could just change that one word from patient to customer, it might help change attitudes.

As for the term customer-owner, as Alaska natives, we're all taking over and actually owning the operations and management, so the idea was, let's make all of the patients owners too. I didn't think it would fly actually, because if you're a doctor, that's not easy to do.

But it has. In the end, I'm trying to win you and you're trying to win me.

HLM: Tell me about the word 'Nuka' and what it means in this healthcare context?

Gottlieb: Alaskans use the word Nuka in many different ways. It's a word with strength and love in it together. So it has that kind of meaning. It's about us owning our own behaviors in health and our providers walking that journey with us.

The real key is our focus on primary care and behavioral health. Nuka is also about living and breathing what we do through our [1,800] employees. The employees live it out.

Nuka is also about calling each other out on the issues when necessary because we know we're living with shared responsibility. So employees will do that. If something doesn't feel good, people will say that to each other, and it's OK. It's the way we improve.

HLM: What's your payer mix like, and how does it serve the mission?

Gottlieb: Indian Health Services is about one third, Medicare and private payer is about one third, and the rest is funds from the foundation and grants. We're very aggressive on that. We have three grant writers working full time to support the work we're doing. The way we allocate those resources is our annual budget cycle.

HLM: Tell me why your pursuit of the Baldrige award was so important. And since you won it, how do you find new challenges?

Gottlieb: We came to a place where we needed systematic change. We had already gone through redesign, governance, had managers and data systems in place, and a financial and sustainability structure. But as a CEO, I knew we needed some way to shake things down and tighten things up.

My vision was for tightening policies and procedures. But then I thought no, there can't be a tool for that. While I was looking for one, one of our administrators at the time described the Baldrige process to us, and I found it was perfect because it didn't try to control, it doesn't tell you what to do, it asks questions that drive you to systematic change.

You have to write it all down, and it gives you this thing you can feel and touch. Actually, we used the application itself as a tool. At first, we weren't looking to apply for the award, we were just using the tool. But eventually, we figured, if we're going to do the application, we might as well apply for the award.

Here's a question that I find great: How does your staff know they are achieving their vision statement? If you ask people that, not many people can answer it, but Baldrige people can. We answered by tying our vision and mission statements into goals and corporate objectives, and then tied work initiatives into the objectives, and each initiative is tied to one of our employees. They can now respond directly [about] what they're doing to achieve the vision statement.

Another great part of the application: 'You're the CEO and you get to make the decisions under the governance for the corporation. We want you to delegate that authority to employees.' That sounds easy, but everyone likes to have control. That meant allowing employees to make decisions.

That started our four committees. Anyone can join with direct and supervisor permission, they work in operations, quality, customer ownership and how to drive change, you can be on one of those committees and can make decisions without coming up to me or the vice president level because they fall within the strategic plan and the budget. The innovation and creativity that happens within the organization keeps rolling out because we empower employees to be creative.