Marshfield Clinic - Case Study

  • Reversed a trend of declining surplus, to produce a 300% increase in surplus for FY99 and a 340% increase for FY 2000, far outperforming its peer clinics.
  • Increased productivity per physician in 1999 by 7.4 %.  RVU productivity increased by 15% in FY 2000.  The health care sector as a whole has a declining productivity of negative 2.6%.
  • Eliminated and paid back physician withholds, gave salary increases to all staff, and gave bonuses to physicians and staff.
  • Increased the Clinic’s cash on hand by 65%.
  • Internally driven Organizational Restructuring resulted in better accountability, decision making and problem solving — each key issues at the start of project.
  • Creation of Physician Administrator Teams to lead each of 7 divisions enabling the divisions to tackle the toughest issues that were previously irresolvable.
  • Implemented across Marshfield Clinic System customized Balanced Scorecards for greater feedback, teamwork and accountability.
  • Created a cultural shift across the clinic from significant resistance towards accountability to acceptance of accountability, and high performance as part of the landscape.
  • Increased the percentage of referrals from the outlying clinics into Marshfield central clinic from 16% to 70%.

John Smylie, Former COO of Marshfield Clinic:

Marshfield Clinic System
Performance Improvement Project
With Tor Dahl & Associates

Marshfield Clinic System is one of the largest private clinics in the U.S. with some 600 physicians and 5,000 employess in 40 clinic locations across central and northern Wisconsin. Marshfield has a large research foundation and Security Health Plan, a 150,000-member HMO.  The main clinic has 250 physicians and shares a campus with St. Joseph’s Hospital in Marshfield, Wisconsin.  The clinic does not operate hospitals. They compete against Mayo Clinic, Ministry Health, Community Health Services and a number of other well-funded systems.

Marshfield in 1998 was suffering from declining financial performance, poor morale, and slow decision making.  They sought the input of consultants to help redesign their board structure.  Their board had over 500 members.  Each physician was a clinic owner and a member of the Marshfield Board, which meets monthly.

During the selection process TDA asked, “How do you know your Board needs to be reorganized?” Doctors are good at diagnosing people. Tor Dahl & Associates is expert at diagnosing organizations and helping them change.  Tor Dahl & Associates was selected from a group of consultants to help Marshfield resolve its challenges. 

TDA interviewed 200 Marshfield doctors, leaders, staff, customers and key stakeholders.  The support for the project grew as people came to understand that TDA was asking the really important questions about performance.  Issues that had gone unresolved for years were being openly discussed.  The TDA Performance Survey, Feedback Sessions and Seminars involved everyone.  All staff and doctors had the opportunity to be engaged in identifying the obstacles to performance and the solutions.  We consistently went back to staff in Feedback sessions that asked, “Did we get it right?”  The logjam of obstacles emerged. 

These logs had the force of consensus behind them.  Everyone agreed that we had the right obstacles identified and that they must be removed.  These obstacles represented the collective intelligence of the Marshfield Clinic people.  The need to act on them was undeniable.  A handpicked group of 150 Marshfield leaders and issue experts converged into a TDA “bootcamp”.   During this intensive 3-day session, the logs were analyzed and a detailed action blueprint was created to eliminate their logjam to performance.  The blueprint quickly moved into action (no small feat in an organization of 5,000 people).  The actions were begun in January of 1999.  By May, the clinic had turned the corner. By June, Marshfield had started a run of profitable months, most of them record months.  This took the clinic from a rapidly declining surplus of $2.2 million in FY 1998, to $6.6 million in FY 1999, to $23 million in FY 2000 — all accomplished under a court-imposed freeze on clinic prices that lasted through 1999.  

One of the results of the TDA process was the learning that took place in the multiple forums dealing with performance issues.  Physicians were interacting with staff with whom they normally did not discuss performance.  As one physician remarked, “I never realized that the scheduling people knew so much.”

The very unpopular physician salary withholds were eliminated and paid back.  All physicians and staff received pay increases and bonuses in 1999 and 2000.  Physician productivity increased dramatically with RVU’s per physician increasing by over 15%.  (The national average for physician productivity increase during this period was a negative 2.6%.)  At the same time Marshfield’s staff, physician, and customer satisfaction all improved.  Referrals to Marshfield specialists from the outlying clinics increased from 16% of referrals to 70%. Job satisfaction and patient satisfaction increased significantly.

The Marshfield 250-employee business office had been facing staff shortages and an inability to meet the Clinic goal of increasing cash from 44 days of cash-on-hand to 64 days.  TDA facilitated a performance workshop that resulted in improved morale, elimination of the need to replace the staff vacancies and an increase in cash-on-hand from 44 days to 74 days of operations - a dramatic success.

A pearl of wisdom from China states, “When a great leader’s work is done, the people will say, we did it ourselves.”

Part of the beauty of the TDA process is that it is so engaging that the staff in the client organization can rightly say of the success, “We did it ourselves.”  This builds pride in the accomplishment and the impetus for continued change.

Working within the Affective Domain, the TDA process deals with people’s emotions to engage people and helps make the change process more acceptable - even exciting. This is a hallmark of the success of the TDA process.  In the change process, there are always some people who have a very strong personal investment in the status quo. These people are often referred to as “late adopters” or “never adopters.” When these “late adopters” are physician “owners”, one might imagine their ability to resist and even sabotage change efforts could be daunting and disruptive.  Despite an active attempt by a small group of physicians to stop the performance improvement effort, the TDA process was robust enough still to deliver dramatic results. 

Marshfield is a member of the Clinic Club, consisting of 11 of the largest clinics in the United States.  Virginia Mason, Sharp Rees-Stealy Medical Group, Health System Minnesota and Scott & White are members, too. Marshfield now enjoys the position of having the largest surplus from operations of all the clinics in the Clinic Club.  Most Clinics are losing money and many are facing mergers with other larger organizations.

Marshfield is one more example where the Tor Dahl & Associates' performance improvement process has produced dramatic results. Others include eliminating queues for medical care in foreign health systems; improving safety, claims processing turnaround times, national insurance ranking scores, customer satisfaction, market share and staff satisfaction; creating success in commodities businesses; and working in union environments.  Over 25 years, the TDA performance improvement process has proved its value in some 400 organizations around the world.

Letter from the President of Marshfield Clinic

Dear Dr. Dahl:

As we discussed, I have reflected upon the attributes of Tor Dahl & Associates’ engagement with Marshfield Clinic, and I convey those to you in this letter.  Please feel free to share this letter with whomever you wish.

In 1997, after prolonged internal discussions on financial performance, organizational structure, and operations efficiencies, Marshfield Clinic decided to engage an external consultant for a comprehensive review.  We received proposals from and interviewed a number of well-known consulting firms.  We chose Tor Dahl & Associates because we felt it offered a unique approach, namely grass roots diagnostics and including people in the process who would be affected by the outcome.

The TDA engagement started in April, 1998 and ended in September, 1999.  It included 208 detailed interviews with people at all levels, 1,700 additional surveys, 241 group feedback session, multiple additional seminars, and many individual briefings with leadership and others.

While the process required a major commitment of collective time and energy, it did get the entire organization focused on examination and acknowledgement of the problems and formulation of potential solutions.  I felt that TDA’s diagnostic instruments were excellent.  I felt that TDA’s message of inclusion, information sharing, teamwork, and emphasis on the importance of the work place environment were also appealing and effective.

Financial recovery started in mid 1999.  Fiscal year 2000 was an excellent financial year for Marshfield Clinic.  While there were many reasons for this, some unrelated to the engagement, average physician productivity, adjusted for Medicare RVU changes and fee increases, increased by over 5%.  That gain appears to be holding into fiscal 2001.

Measured staff satisfaction increased and has continued to increase with each survey.  Measured patient satisfaction, although always good, has also improved.

I wish you well.

Cordially,
Frederic P. Wesbrook, M.D.
President