What decisions would you make if you were a Humana finance executive in 1992, operating a company with a large HMO and a hospital business that were in conflict? How would you restructure the company amid physician unrest? And how would you know you were moving in the right direction?
Answering those questions was one of the tough assignments awaiting Roger Deshaies, chief financial officer of Parkview Health System in Fort Wayne, Ind., as part of the Harvard Business School's Focused Financial Management Series held in May. As recipient of the 1998 Cain Brothers Award, Deshaies, 48, attended the course, where finance executives in various industries from around the world spend two weeks analyzing more than 50 financial case studies.
This year's segments focused on four themes: taking venture capital into the international arena; minimizing losses and risks from foreign currency exchanges; placing a monetary value on businesses; and changing a company's focus to enhance financial value and performance. Each course lasted 21/2 days, and Humana was presented as a case study in the change-of-focus segment.
"It sounds technical, but those (four categories) are cool things for finance people," Deshaies says.
Cain Brothers, a New York-based investment banking and capital investment firm, conducts an annual competition for finance executives in healthcare and sends each year's winner to the Harvard series. Nominations for the 1999 Cain Brothers competition will be accepted early next year. The winner then will attend the Harvard program, which is set for May 9-15.
Deshaies had been instrumental in helping Parkview launch a managed-care organization, build a multimillion-dollar medical office mall, acquire two hospitals and create a parent organization to manage the growing integrated system. Since Deshaies took the Parkview CFO job in January 1990, the 660-bed, three-hospital system has racked up total profits of $200 million, with average annual net income of $26 million (April 6, p. 96).
During the Harvard series, Deshaies endured late-night cramming, study groups and suffocatingly small dorm rooms in exchange for networking, a wealth of financial knowledge and an occasional party.
A typical day at Harvard started with classes at 8: 30 a.m., followed by a lunch break and two afternoon classes that ran until 5: 30. Each segment was taught by a different Harvard professor. The professors developed their own case studies-in some instances using their experience with the actual case principals.
"The (classroom) exchange is very fast-paced," Deshaies says. "If you weren't well prepared, it could be very embarrassing. If you weren't actively engaged, they would engage you.
"The professors look for the students to provide and share ideas on what would be a suitable solution. Then they lead you to the choice they feel is the right choice. The professors were not only instructional in teaching us but in some cases were actors. They had a style of teaching that was entertaining," he says.
The executives and professors had time to further pick one another's brains over cocktails and dinner. Deshaies had a lot to offer during these social times, he says-particularly with regard to the professor's approach to the Humana case study.
"In the healthcare example involving Humana, I think (the professor) missed a couple of significant points that would have led me to a slightly different conclusion, (and I gave my perspective based on) my own industry experience."
In 1992, Louisville, Ky.-based Humana was operating both a large managed-care business as well as a chain of hospitals, which resulted in an adversarial relationship between physicians and the company's hospitals. So executives decided to spin off 76 hospitals into a new company, Galen Health Care, which was sold in 1993 to Nashville-based Columbia/HCA Healthcare Corp.
"The way the professor presented the case, he wasn't as appreciative of the fact that other payers would see Humana . . . in insurance as a significant conflict," Deshaies says. "The professor thought the doctors wouldn't like that because Humana was double-dipping on both the hospital and insurance side. But I don't see that as something that doctors would wake up at night and worry about.
"I thought the reason for the split was 90% due to the payer reaction. At that time, a number of major payers refused to contract with Humana hospitals in those markets. That would be more irritating to the doctors than anything else," he says.
The two-week class hasn't changed Deshaies' strategies at Parkview, but he does believe it has enhanced his problem-solving capabilities.
"It's the type of thing where I don't think you're going to come back and change how you do business, but I can't help but look at things in a different way," Deshaies says. "I've challenged my own way of thinking and problem-solving. It's a fantastic opportunity for mid-career executives to hone up on skills and techniques."