If his colleagues are to be believed, Stanley Nelson is a visionary.
"He's had an unerring knack for identifying where the field ought to be heading and then getting there ahead of anyone else," says C. Thomas Smith, chief executive officer of Voluntary Hospitals of America, an organization Nelson helped found.
In 1967, as CEO of Northwestern Hospital in Minneapolis, Nelson engineered a merger with another major hospital. The move came years before the consolidation wave hit most healthcare markets.
And when Nelson took over a beleaguered inner-city hospital in Detroit in 1971, who would have thought that opening a couple of outpatient centers in the suburbs would be the key to transforming it into what is today the Henry Ford Health System.
Nelson is "a turnaround guy (with) an uncanny sense of timing," says Patrick Hays, president and CEO of the Blue Cross and Blue Shield Association. "Although he's a low-key person, he is one of the real giants of healthcare."
Seeking challenges. Stanley Roe Nelson was born on Aug. 12, 1926, in Stanley, Wis., to a mortgage banker and a homemaker. He attended the University of Minnesota, where he earned a bachelor's degree in economics.
He says he decided to take a master's degree in hospital administration, at that time offered by only a handful of schools, both for the element of public service and the potential for challenging opportunities.
After graduating in 1950, he worked as an assistant hospital administrator, first at Butterworth Hospital in Grand Rapids, Mich. (now Spectrum Health-Downtown Campus), and then at Parkview Hospital in Fort Wayne, Ind., which had just begun construction of a new hospital.
In 1955, two years after the new hospital opened, Parkview's CEO took a job in California, paving the way for Nelson, at the ripe age of 28, to take his first crack at the helm of a hospital. "Everything was new and different. We started expanding almost immediately," he says.
One of the first projects he undertook was to build a long-term-care unit for the hospital, an unusual addition at the time.
"It was a wonderful first experience as a CEO," he recalls. But by 1961, he was ready for something new.
"The hospital was so well-positioned that the future was predictable," he says. "I could see future expansions rolling out ad infinitum."
He found a new challenge with his next job, as CEO of Northwestern Hospital in Minneapolis. It was governed by a board of 48 society women who were dedicated but not particularly decisive, Nelson says.
"The hospital was running at full capacity, but it was not efficient," Nelson says.
The facilities needed remodeling and the programs, revamping.
"(The board members) knew it had to be done, but they didn't know how to get it done," Nelson says. So for the next five years, he showed them.
Merger pioneer. By 1967, Nelson had upgraded Northwestern's buildings, brought experienced businesspeople on the board, and boosted the bottom line. But to prosper in the long-term, the hospital simply needed to be bigger.
Nelson already had helped form an alliance with four other hospitals in Minneapolis, and it was just one step further to propose a merger to the CEO of rival Abbott Hospital. Despite some detractors, trustees and medical staff soon fell in behind the idea, and by the end of the year, Abbott Northwestern Hospital had become a reality.
"We merged out of strength, not out of crisis, and in that way it was a merger that was ahead of its time," Nelson says. Nelson continued as CEO of the merged organization until 1971, when he was recruited to lead Detroit's Henry Ford Hospital back to financial health.
By all accounts, Henry Ford had hit a low point. For years, Detroit's most prosperous citizens had been quitting the city for the suburbs in a steady stream. By the early 1970s, neither patients nor healthcare providers with the means to go elsewhere were choosing to come to Henry Ford.
The hospital's administration had done little to help matters. New computers installed in 1968 crashed shortly thereafter, leaving the hospital unable to bill accurately for three years. The nursing staff had been allowed to dwindle to little more than 100 nurses, an inadequate number for the hospital's 1,000 beds.
And the hospital was technically bankrupt to boot, Nelson says.
It was, in short, a perfect outlet for Nelson's ambitions.
"I wanted to see if the same things that worked in turning Northwestern around would work in a much larger setting," Nelson says.
To carry out his vision, Nelson hired a new crop of managers, including Smith, who became his chief operating officer, and Hays, who says his own leadership style was shaped by Nelson's.
"He taught me that if you enter an organization that needs to be changed, you do it with class and a certain amount of subtlety," Hays says.
While Nelson's style may have been subtle, the changes he made were dramatic.
"The first priority was to get the financial system up and running," Nelson says. Next, he worked to rebuild the nursing school to attract nurses back to the system.
Going ambulatory. Then it was time for an even more fundamental change. At that time, most hospitals drew nearly all their revenues from inpatient beds. But Nelson decided to capitalize on a different aspect of healthcare.
"We were more than a hospital," Nelson says. "We were in the ambulatory-care business already, unlike virtually all hospitals at the time."
So Nelson set about planning and building two major ambulatory-care centers, an entirely new idea for the hospital industry. The centers were big-75,000 square feet-and were built on unused land owned by Ford Motor Corp.
"We got a lot of patients because we went to them instead of asking them to come to us," Nelson says.
As the hospital expanded, total revenues shot from $83 million in 1975 to $251 million in 1980, and then to $498 million in 1985.
Many doctors, including Con McCole, M.D.-an eye surgeon at the hospital since before Nelson's time-had their doubts. But soon they had to admit how well the satellite hospitals worked.
"Henry Ford Hospital was in very bad shape," McCole says. "Mr. Nelson straightened it out and put it on the international map."
Financially, Nelson had hit pay dirt. He spearheaded the wave of health systems moving into ambulatory-care services, "and we rode that wave very aggressively," he recalls.
In 1979, Nelson also created one of the first hospital-based HMOs, again blazing a path many hospitals wouldn't follow until years later.
Nelson's changes jump-started the hospital's evolution toward a multisite integrated health system.
"Stan really was the conceptual architect of what is now known as Henry Ford Health System," Hays says. In fiscal 1997, the system's 13 hospitals and 28 ambulatory clinics had an operating profit of $37.5 million on revenues of $1.9 billion.
And like any good leader, he let others do their jobs, too.
"He has an inherent trust in those he works with," Hays says. "He gave us a long leash. `You folks go out there and do it,' he would say. `Just don't do anything dumb.' "
By the time Nelson retired in 1988, Henry Ford Health Care Corp. (the name was changed in 1982; consolidation in 1990 changed the name again to Henry Ford Health System) had 25 outpatient-care centers as well as nursing homes, home health services and specialty hospitals.
Nelson's other legacy from his Detroit days was the alliance of not-for-profit hospitals known as Voluntary Hospitals of America.
During the 1970s, for-profit hospitals had started to make inroads. As VHA's Smith describes it, "There was a fear on the part of a lot of the not-for-profit CEOs that those organizations would gobble up all the hospitals in the country."
So in 1977, Nelson and a few others in the industry brought 29 hospitals together to form VHA. Again, Nelson found plenty of naysayers.
"None of our materials managers were very excited about it," he says. VHA was run out of the Ford system for its first three years, until it gained enough strength to take off on its own. In 1982, VHA faced an antitrust challenge from four regional medical supply houses. When it won, Nelson says, it set a precedent for the creation of other large purchasing coalitions. Today, Irving, Texas-based VHA has more than 800 members.
Since his retirement from Henry Ford, Nelson has worked as a consultant. He helps healthcare systems integrate information technology into their businesses in his position as founding chairman of the Scottsdale Institute in Minneapolis. He says he hopes to engineer an entirely electronic patient record.
Coming from anyone else, such an idea might seem impossibly optimistic. But in light of all the other concepts that Nelson successfully pioneered, perhaps such a feat is simply the wave of the future.