Chapter 2

The Hornet’s Nest

It was Monday morning, but I was anxious to get to work after a week at a conference full of insurance adjusters, most of them excited about recent changes to the Medicare/Medicaid verbiage. It is a topic we have to untangle for our business plans, but I was admittedly distant, more curious to see how my team in the office was doing in my absence. The last few weeks had been hectic, but everyone seemed to pull together with some creative solutions. I had left the office confident in how my team would perform while I was away. Confirming my expectations, I did not receive any calls during the conference—a good, albeit unusual, sign.

At the conference registration, I bumped into Peyton Peterson, a classmate from my undergraduate days. I had lost track of Peyton over the years, but at these massive conferences, I had learned the hard way that it is generally best to share a table with someone you know versus a stranger who may have peculiar habits. Recalling Peyton’s studious characteristics and common sense, I asked to share a table.

Peyton’s reply surprised me: “Sure, maybe we can catch up on things during break. But I really want to learn this material.”

Good choice, Pat, I thought to myself. “No distractions here,” I said.

Over the course of the week, I learned that Peyton faced the same career dilemma I had a year earlier, so I offered some counsel—at breaks, of course. I explained to Peyton that I had been working in the accounts receivable department at a local 500-bed hospital. “The job was secure, the hospital was solvent, and I had moved up from a college intern spot to a full-time position. I had overcome my earlier identity as an intern and convinced management that I was ready for a supervisory role.”

“How did you accomplish that?” asked Peyton. “I’m still suffering a bit from the intern image and would like to understand what you did to get them to recognize your abilities. My goal is to become the divisional expert on this Medicare/Medicaid topic we’re learning about this week.”

“Some of it was luck,” I said. “But mostly it was lemonade from lemons. Over a few years, I had made numerous lateral moves that exposed me to many areas of the business and several departmental managers. I observed and analyzed different management styles and chose to emulate those that worked best as I worked on my own future. I felt pretty fortunate to have had those opportunities, not to mention all the technical knowledge I gained from bouncing around between different areas of the business.”

“I see how the lemonade strategy worked for you,” said Peyton. “But I’m on my second manager now, studying Lean tools, and I don’t exactly get the feeling that I’m on the fast track. I think it’s going to take something else.”

“I was lucky … sort of,” I explained. “My employees performed well, met and exceeded the goals set for them, and made me a valuable asset to the company in the process. I thought that was going to be my ticket to bigger and better things, but I soon learned that being a valued supervisor wasn’t necessarily the best thing for my career. It was clear that I had become so good at what I was doing that I was never going to get promoted.

“Maybe I should have discussed my situation with my manager or someone who could have given me advice. But, as they say, timing is everything. I took a phone call from a recruiter and entertained an inquiry from an insurance company. Even though I didn’t know anything about claims processing, I was a lifetime learner and a good supervisor, and knew I was ready to get my feet wet as a department manager.”

“So, you didn’t get into management by becoming a technical expert?” asked Peyton.

“Well, yes and no,” I said. “Initially, I became technically savvy to demonstrate competence to my superiors. Then, I started looking at the bigger picture and where I wanted to be in 3 to 5 years. The fastest way to get somewhere is to know where your journey will take you. Keep that in mind as you strive for that expert status you mentioned. You might be valuable, but you might be too valuable to be promoted.”

I wondered if I was still trying to justify my decision to leave the hospital. Things had been comfortable there, and steady. Insurance, on the other hand, is about risk, in more ways than one, and the past 8 months at my new job had not always been comfortable.

The insurance claims business was new to me when I started. In my prior experience in hospital accounts receivable, I had dealt with the insurance market for years and learned that some claims processors were much more capable than others. My reputation was equally known. One of the less respected but larger insurance companies had gotten to know me better than either of us would have liked because of constant expedites, quality problems, and settlement errors. They had some chronic issues they genuinely wanted to fix, but they continued to be unsuccessful. When the recruiter contacted me, she explained the situation, their challenges, and their commitment to fixing this problem by hiring a professional from the outside.

I was initially intrigued, but she really got my attention when she told me they wanted to hire a manager who could apply Lean teachings. It was an exciting challenge to start fresh at a company and have the chance to fix some of their problems.

A cheery voice from the ordering window at my local coffeehouse interrupted my reflections.

“Good morning, Pat. Your usual?”

“Yes, grande latte, two shots of espresso, thanks.”

Moments later, I took my coffee and drove toward the office, sipping while trying to avoid the potholes and the few other drivers on the road.

When I got to work, I easily found a good parking spot in the lot, grabbed my briefcase, and cradled that precious coffee as I stepped out of my car. Soon, I was walking briskly toward the seven-story building and planning my day in my head. I had come in early to try to make a dent in the backlog that was sure to have accumulated while I was at the conference. At this hour, there would be no people, and no people meant no distractions.

When I was almost within the shadow of the building, it happened. The lights came on in my boss’s corner office on the third floor.

It is OK, I thought. I will just quietly enter my office. I can still get an hour to myself to wade through all the e-mails, voice mails, and memos that are no doubt waiting for me. After that, when the workday officially starts, I will have finished my coffee and can check in with Chris in the corner office.

I can take the stairs rather than the elevator. It will be a bit more clumsy with this coffee, but I can control the staircase door and close it quietly to get in unnoticed. There is no need to disturb the boss, who probably wants to get on top of the chaos before a fresh round hits this week. This way, we will both be able to get a good, uninterrupted start.

I made it through the lobby, up the staircases, and into my office without any loud noises: no doors slamming, no laptops crashing onto desks, no chairs banging into walls. Generally, Chris sings out a greeting when it becomes apparent I have arrived, and the absence of a welcome suggested I might have some solitude.

I carefully set the coffee on my desk and started to organize the mess, a healthy dose of voice mails, e-mails, and Post-it® notes. Where to begin? Post-it notes are urgent because they were delivered in person. Voice mail is next because someone could not wait for a conventional response. E-mail is next, then the in-basket.

I pulled the Post-it notes off my desk like I was an archeologist doing a forensic analysis at a dig site. Obviously, the ones on top were the most recent, but perhaps they had a linkage to some of the ones buried deeper. I reviewed them one by one, matched them with their predecessors, and then arranged the piles into two groups: action items and status reports. There was only one action item, and that could wait until everyone else arrived.

Next was voice mail. I reached for the phone and it rang right when I touched the handset, causing me to nearly spill my coffee all over my desk. I caught my breath and grabbed the receiver before the second ring, thinking I might be able to prolong my solitude if Chris had not heard it: Answer it quietly.

“Good morning, this is Pat O’Malley,” I said in a strong but quiet tone, realizing then that I had not had the presence of mind to check the caller ID before picking up. “How can I help you?”

“Aha! I sensed you were here, and I saw your office light spilling into the hallway,” said Chris. “But I expected you to stop by as usual. Have you checked your e-mail yet?”

“No,” I replied. “I was just getting to my voice mail when you called. What can I do for you?”

“So you haven’t gotten to your e-mail yet?” Chris repeated. “Then you don’t know that Mercy Hospital, one of our biggest customers, is irate? I’m surprised no one contacted you while you were gone. Well, I’m glad you’re here early. Come to my office. You don’t need to go through all the e-mail strings now; I’ll fill you in on what’s important. But you’ll probably want to read through everything later tonight.”

Later tonight? What did that mean? What had happened?

During my 8 months here, Chris had never been that direct. Whatever this was about, it must be serious—and might signal the end of the new-associate honeymoon. I grabbed my notepad and hurried into Chris’s office.

“What’s the situation?” I asked.

“Last week, we let a very important claim drop through the cracks, and it was late getting out to Mercy Hospital, one of our biggest customers. We were missing simple information on the claim; it got sidelined, and we didn’t even notice it was late. Wednesday morning, the day it was targeted to clear, Mercy called us to get the status. When we had to request the missing information, it was obvious that we were just starting the claim. Worse, they said they’d charted a downward trend in our performance. They actually anticipated the claim would be late based on the poor performance record we’d generated over the past quarter, and since this claim was particularly large, they’d put us on watch.

“I had to get involved and was told by your team that for the past 8 weeks, they’d been limiting the number of expedited claims allowed at any time to two, and they had already hit their max when the Mercy one rolled around. They were quick to explain that this system was effective in eliminating the daily peaks and valleys in their workload and had allowed them to be more productive with fewer priority shifts.”

At least my team understood the new system, could explain it, and were disciplined to the point of defending it. But, what had gone wrong? We had all agreed to the changes during a kaizen, or rapid improvement event. We tested the rules for 6 weeks, made adjustments as needed, and had a challenge to the “two-per-day” limit during the whole trial period.

I wanted to speak, but Chris was not even taking a breath.

“I then persuaded, no, I told them to expedite the Mercy Hospital claim, and Bob said he would shepherd it through. This was last Wednesday.”

We did not count on a claim being sidelined that long, but what am I supposed to do? Change our standard operating procedure to make sure we always take care of Mercy Hospital first? Our intention was to treat all expedited claims the same, regardless of the customer, and Chris knew this. We had spoken about the issue at length when the system first rolled out.

“What’s the status now?” I asked. “Did we get the check cut on Wednesday?”

“It finished on Friday at noon, 2 days later than they expected it,” said Chris. “Your team offered reasons why it took so long, but I know this process. I worked my way up by performing every task, and it shouldn’t have taken that long to expedite—expedite!—a claim. There’s no reasonable explanation for why we missed the target, just excuses! You know time is money, especially in this economy, and we cost Mercy 2 extra days.

“But that’s not even the real issue. What’s more concerning is that one of our customers seemed to know more about our performance than we did. So, I had the Information Technology Department create a report for the last quarter showing how long each claim took to process, plus actual versus planned completion dates. I confirmed the downward trend, not only for Mercy Hospital, but also for most of the claims we process. It creates a hefty cash float, which is positive for us but bad for our customers. Based on our performance over the last quarter and what Mercy Hospital told me, we could be in danger of driving them to another partner. And, for all we know, other customers are thinking the same thing and just not telling us. Do you realize the financial hit we would take if that happened?”

Yes, I did. That was one of the things I came to fix.

“Pat, I could ask you a number of questions right now, but I don’t think you’d have answers for any of them. I realize you didn’t gain your experience processing claims here like I did, but that doesn’t matter now. We need results, and we need to come up with a corrective action plan very soon that demonstrates how committed we are to improving our performance for all of our customers. We can’t just create a Mercy Hospital group and use it to expedite their claims. That won’t get to the heart of the issue. We need to get better for everyone, or we’ll lose them all.

“The corrective action plan is your department’s responsibility. I want to have that plan in my hands for review Tuesday afternoon, one that applies to Mercy Hospital and every other customer.”

Chris paused for a second, then leaned in to give me some more personal guidance.

“Look, you’ve only been here for 8 months, and already I’ve seen some improvements. But we, and you, have a lot riding on this. I’m really troubled about the expedite criteria and the limit your team told me about. How can we serve our customers when we’re only allowed to process two expedited claims at any given time? You can’t control when something has to be expedited, Pat, you have to react to it. That’s what good managers do: react, adjust, direct as needed, and get everyone together in a meeting to fix the problem. I don’t think you can limit the number of expedited claims, so that’s where I’d start to look.”

“OK, Chris, I won’t let you down,” I said. “Things have been getting better over the past 2 months, at least from where I sit. I understand business, so I recognize our customers’ cash flow is important. I’ll start pulling some strategy together now and gather the team when they get in. I’ll get right on this, and I’ll check in with you later today to let you know where I’m headed.”

“OK,” said Chris. “But remember, it isn’t just me you have to satisfy; it’s our entire customer base. We can’t lose Mercy Hospital, or any other account, for that matter. We brought you in here 8 months ago to fix things, and much of our reasoning was based on how relentless you were in managing our account. I expect your doggedness to continue now. I know most of the associates in your department have other duties besides claims processing. They always have and always will. But, this tardiness can’t continue. Let me know if … .”

“I’m on it.”

From the Author

Traditional Lean teaches us to eliminate waste by looking at areas where non-value-added activities occur, then use tools such as kaizens to reduce or eliminate the non-value-added activities. This approach has been successful in the areas addressed. During kaizen events, management’s role is to identify improvement objectives, set goals and targets, provide leadership, and remove barriers that might prevent the team from accomplishing its goals. Management generally avoids prescribing or dictating specific solutions to the team, as frontline ownership of the improvement initiative is critical to its long-term success. Creating team-level ownership ingrains the improvement into the culture and solidifies the new way of doing things—until something goes wrong.

As soon as something goes wrong, the typical response is for managers to step in, provide direction, override the existing way of doing things, and fix the problem to get everything back on track, usually by holding meetings and telling everyone what to do—the exact opposite of the approach used during the kaizen. We can think of this as “management muscle.” Leadership reinserts itself into the operation to fix the problem and “muscle the work” through to the customer, regardless of the system currently in use. This frequently involves holding many meetings to set direction, developing a corrective action plan, and then monitoring and following up on what was done to ensure the problem stays fixed. In fact, many managers spend a good deal of time each day doing this and taking care of other issues as they arise.

When we rely on management muscle to fix problems, it becomes established as protocol, and the office ends up depending on this response indefinitely. This not only undermines the work of previous improvement efforts but also limits management’s ability to work on other things, to the detriment of the business as a whole. While the original improvement initiative likely eliminated waste and improved performance, management still finds it necessary to step in and correct things when they go wrong.