2008 Distinguished Alumni Awards
Joanne Smith, MD, MBA '00, Public Service/Public Sector Alumni Award
Spend Five Minutes with Smith
Image by Matthew Gilson
Joanne Smith, MD, MBA ’00, went from attending physician to first female CEO of her hospital, expanded the brand, and persuaded the Pentagon to better serve wounded soldiers.
Chicago Booth Magazine asked professor Harry Davis to question Smith about current challenges facing health care, running a hospital as a business, and leading the Rehabilitation Institute of Chicago through its expansion.
Joanne Smith, ’00, planned to be an MD, not an MBA. Now as CEO of the Rehabilitation Institute of Chicago (RIC), the nation’s premier physical medicine and clinical rehabilitation facility, she bridges the practice of medicine with the business of health care at a time when both face unprecedented change. Meeting the challenge at RIC has placed her on Chicago magazine’s list of top doctors and earned her the 2008 Distinguished Public Service/Public Sector Alumni Award. She recently fielded questions about leadership from Harry Davis, Roger L. and Rachel M. Goetz Distinguished Service Professor of Creative Management.
Davis: It must be difficult to distinguish yourself as both a physician and an executive, and you have accomplished this. What is your secret? And what advice would you give others in making a transition from specialist to generalist?
Smith: I have always held a passion for science and medicine. I’m committed in my profession to help patients thrive, and now on a broader scale, to help an organization thrive. One is the continuum of the other; it’s still that core responsibility. This is an incredibly exciting time in health care, but it’s an incredibly challenging and risky time, too. Right now, the majority of our health care delivery is process-measured: You came in with chest pain. How fast did we do an EKG? Did we give you aspirin? If we apply the right processes, the outcome should be better. But we’re moving toward an outcome base: What happened to the patient? Did you make a difference? At what cost? What was the value of what you delivered? This is a complex and philosophical change in health care.
On the delivery side, advancements in facilities and equipment are coming at an increasingly faster pace, and supply and demand dynamics don’t follow economic logic. In health care, the more you supply of a new device or technology, the more there is demand. Patients are getting smarter although some, unfortunately, are ill-informed, so the clinician now is even more challenged with the patient education part.
On top of it all, supply chain management in hospitals lags behind even an average factory operation in the manufacturing sector.
Then apply the third party — health insurance — having an impact on every decision. I would love to be able to look at a patient and say, “Here’s what we’re going to do and what it’s going to cost.” But I can’t do that; I have a third party who has the authority over the decision and that third party has no personal or emotional investment in the implications of that decision.
This industry is ripe for an influx of smart managers and leaders with passion and relevant experience to help improve the way we think about health care, deliver it, and position it for the future. Doctors aren’t equipped to do this with just medical training. This is a field where we need better talent to help develop better cultures and capabilities to optimize how the setting operates, how we use resources effectively, and how we build talent streams that position us for a better future. And we’re not there yet.
Davis: You’ve been quoted in Chicago magazine as saying, “If you deliver care strictly as a business, you will fail.” Could you elaborate on that?
Smith: The word “care” implies empathy, and the word “business” implies exchange. In a normal business transaction, you walk away with a good or service and some value metric behind them and you’re satisfied. In my organization, we sell hope, we sell inspiration, we sell ability. People come with anxiety and fear about their future, and we provide a service; in doing so, we restore their confidence in the future. There is certainly a transaction, but there’s a transformation that’s physical or emotional or behavioral or vocational — or even spiritual. But that transformation is not conveyed to them for a fee. Rather, they discover it themselves as a result of our intervention.
Health care is a business, certainly, and we should be held accountable for optimizing the resources and delivering it in a respectful and value-laden way. But there is also the human transformational piece of health care, which is very different than the exchange of a normal business transaction.
Davis: What have been the challenges of RIC’s rapid growth in maintaining the quality of patient care?
Smith: Maintaining quality is not as much of a challenge as translating the research and science behind what we’re discovering every day. Our team has imported better systems and infrastructures that help clinicians deliver care in a more systematic and routinely successful way, day after day, in every one of our locations. But what is happening on the research side at RIC needs to translate more quickly into the clinical setting. I have a sense of urgency about our translation of science and evidence to the clinical setting because I know it will propel our quality and outcomes well beyond today’s benchmark.
Davis: In your opinion, how portable are the skills you now utilize in your role as president and CEO to other industries, both nonprofit and for-profit?
Smith: I’m on the corporate boards of two New York Stock Exchange firms, both global manufacturing device and equipment companies, and I’m vice chair of one. There’s a third firm — a manufacturing company — whose chairman calls me just about every month and asks me to come on the board. This experience suggests that my skills are valued, in part, because I understand a complex industry at the end-user level, at the professional talent level, and also at the highest governance level of the organization —the board. I love my view and I’ve been able to translate my skills and knowledge to other sectors and industries. So yes, I would say they’re quite portable. Moreover, I’ve become a better leader because of such experience.
Davis: Did you originally plan to get an MD and an MBA?
Smith: No, it wasn’t even on the radar. I was finishing up my residency and finally making a real paycheck. My husband, Rory Repicky, ’94, was getting his MBA from the GSB and I was thrilled to be a new attending physician at RIC. The CEO back then thought I would be a good representative to go to the University of Chicago Hospitals, get on the medical staff, and show them what we did and how we could help. U of C Hospital was — and continues to be — a great hospital on the forefront of acute, “cure-based” medicine, but at that time they didn’t have any idea of what we did in the post-acute sector. I did not want to go on this assignment because it disrupted my practice at RIC.
However, it was the greatest thing that ever happened to me professionally because I learned how physicians made decisions about patients who were in the acute setting but didn’t fully recover or weren’t cured. Essentially I gained valuable market insight upstream, and it was that experience that got me interested in learning more about how the market works — so I decided I wanted to go to business school thereafter.
Davis: In what particular ways has the Chicago MBA enhanced your performance as president and CEO?
Smith: It’s been the greatest tool and asset to me. RIC has a unique niche and a long-standing leadership position in the United States — perhaps the world. That’s not good enough for us, though. We believe we have a calling to do what others can’t, that we’re positioned to contribute in ways that others are not, and that our success will benefit human lives and change the way people think about the human condition, about ability.
My experience at the GSB has provided the tools and knowledge; for me, it was in finance, economics, and strategy. You can’t get these in medical school, and you can’t lead a health care organization without them. At the GSB, more than any place I’ve been, I have been challenged. I have a better sense of inquiry and also a better tolerance for ideological conflict because that philosophy was pervasive at Chicago. As a result, that questioning and the GSB environment actually made me a better leader and, frankly, a better doctor.
At the GSB, I was surrounded by experts and like-minded students from various industries. I was the only doctor. Nobody thought like I did or had the experience I’d had, so it was quite challenging. But to acquire value from how other students thought, I had to work hard. And I will tell you, cognitively, it was an equivalent challenge to medical school — and perhaps even more difficult than medical school. But medical school was harder physically.
The experience at the GSB has helped me to win confidence in myself as a leader. It’s helped to deepen my understanding of the market and my understanding of the operating dynamics within the complex hospital environment. The GSB pulled it all together for me.