False smiles or pretense are the last things James Hinton encounters when navigating the seemingly endless corridors of Presbyterian Healthcare Services in Albuquerque.
Instead, employees are genuinely glad to see him. The system's chief executive officer and president often greets them with a bright smile and their first name-no easy feat in an organization with some 7,400 employees. When he encounters a veteran nurse, the 40-year-old Hinton regales a visitor with a story about her talent for painting Southwestern landscapes. The staff of a long-term-care unit invites Hinton to a potluck lunch the following day. He accepts while reminding staff members he will keep a promise to buy them all lunch.
Hinton also is quick to use self-deprecating humor. Encountering a combination-locked door that his personal identification number won't open, he cracks that it's a sure sign he's falling out of favor with the staff. When asked who selected the sleek, retro chairs for the refurbished lobby of 424-bed Presbyterian Hospital, the system's flagship facility in Albuquerque, Hinton is certain it wasn't him. "I'm left out of all matters concerning taste," he deadpans. When he teases his support staff that he's dictatorial, they respond with grandly satirical obsequiousness.
The comedian as diplomat as executive exists in all types of businesses, but he or she is a rare find in the ultraserious healthcare sector, and seems even less likely to exist in relatively hermetic Albuquerque, where virtually everyone in business and political circles knows each other well.
A dominant system. Perhaps it's not a surprise that this environment and culture spawned Presbyterian, with roots dating to the turn of the century and a business position that is in many ways unique to healthcare. Unlike hospital systems that may rule a region, Presbyterian dominates an entire state. It's New Mexico's largest private employer, with eight hospitals (with a ninth in Colorado) controlling nearly 20% of the state's 4,400 acute-care beds.
It owns the state's largest HMO, Presbyterian Health Plan, with more than 350,000 enrollees-covering about one of every four New Mexicans. Its flagship facility is New Mexico's largest hospital. The system also has a variety of ancillary operations, including outpatient clinics, a hospice, a home-health business, a nursing home and an ambulance service.
Presbyterian's influence is such that the Albuquerque Journal, a newspaper that places great emphasis on investigative journalism, in 1998 published a lengthy but inconclusive series on the system's structure and impact in the state.
At first glance, nobody would think the youthful-looking Hinton is running such a widespread and powerful institution. When he isn't cracking jokes, he has a thoughtful, academic air that somehow meshes well with the muscular build he's acquired through his passion for long-distance bicycle riding. His humor enhances rather than masks his frankness and sincerity, yet he doesn't project an air of authority. And while he exudes confidence, Hinton seems more than a little uncomfortable with the spotlight. He repeatedly tells colleagues the reporter trailing him is writing only about Presbyterian.
Native son. On the surface, at least, Hinton is the prototypical small-city success story. He was born and reared in Albuquerque, earned an economics degree from the University of New Mexico and has left the state only to attend graduate school in neighboring Arizona. Hinton's entire career has been spent at Presbyterian. When he was appointed CEO in 1995, he became only its third leader since the early 1950s. Hinton's wife, Carol, ran Presbyterian's health plan before leaving to spend more time with their two children. Some Presbyterian employees know Hinton from as far back as grade school.
Hinton's resume hints at insularity, yet his achievements do not. In a business where few executives are taken seriously before they're 40-and in a state where the old-boy network is so powerful that a former governor runs an HMO-Hinton was handed the reins of a major healthcare system when he was just 36.
Yet many say he rapidly grew into the vast responsibilities. "He was quieter and less assertive a few years back. Now he's more aggressive and shows a great deal of courage," says Teri Cole, executive director of the Albuquerque Chamber of Commerce and a longtime Hinton ally. "At the same time, he doesn't spend a lot of time on today. He gives a lot more thought to the future."
Career as an afterthought. Hinton waxes so enthusiastically about his job ("There's so much diversity in what I do and the people I deal with, and I love the work they're doing") that it's a bit of a surprise he pursued a career in healthcare nearly as an afterthought. He had considered enrolling in law school, but an internship at the University of New Mexico Medical Center and the influence of his family-his brothers are a physician and a clinical psychologist and his mother was a longtime UNM Medical Center volunteer-changed his mind.
He earned his master's degree in healthcare administration at Arizona State University. In 1983, he became an administrative intern at Presbyterian. Hinton didn't initially like the work. He felt there was a lack of creativity, and he had some initial clashes with department heads, but he stuck it out and climbed up the executive ladder.
Andrew Horvath, M.D., Presbyterian's chief pathologist and one-time chief medical officer, says Hinton has rapidly developed "into one of the best healthcare executives in the country." He gives him particular praise for quickly remaking Presbyterian into an integrated delivery system without betraying its sense of mission-something that scored a lot of points with the system's physicians.
"He has a remarkable ability to see what fits and what doesn't when things can seem very confusing," Horvath says.
Hinton, who has immersed himself in every aspect of Presbyterian's operations, was still very young at the start of his 12-year tenure at the system, and, up to his appointment as CEO doubted that he could handle the top job.
"It was a humbling, scary experience," he recalls. "There were a lot of sleepless nights. I felt the board was taking a big chance."
Youthful advantage. Larry Stroup, an Albuquerque real estate developer who is chairman of Presbyterian's system board and a longtime trustee, believes that Hinton's youth was a plus. "Given the rate of change and dynamics Presbyterian was going through, we thought someone younger could manage that change better than someone who was set in his ways," he says.
Brian Sanderoff, president of Research and Polling, the organization Presbyterian uses to gauge community reaction to its business approach, notes that Hinton's youth immediately distanced him from Albuquerque's old-boy network. "He's not afraid to question them and the way they do things," he says.
The contrasts became apparent in a recent morning meeting between the gray-suited Hinton, who chairs the city's homeless healthcare task force, and city officials. Mayor Jim Baca, a soft-spoken man in his mid-50s who briefly headed the U.S. Bureau of Land Management early in the Clinton administration, attends the meeting in a blue blazer, chinos and bolo tie. Baca bookends the meeting with complaints about the homeless congregating downtown. As Hinton conducts the 45-minute session with brisk efficiency, the mayor steals regular glances at a newspaper on the table and even picks it up to read. Baca's interest is finally piqued when Hinton says the city's hospitals will use their own ambulances to transport intoxicated homeless people to a planned treatment center.
Ironically, Hinton has used the gap between Albuquerque's generations to his advantage. Indeed, one of his most mundane chores wound up shaping the vision he took to Presbyterian's top post.
During 1983, a time he calls his "young punk administrator" phase, Hinton was charged with walking Presbyterian's matriarch to the main hospital from her small cottage nearby.
Marion Kellogg Van Devanter had arrived in Albuquerque more than 60 years before to be with her ailing fiance, who would later die of tuberculosis at the Southwestern Presbyterian Sanatorium. Known among hospital staff as Mrs. Van, she took a job as executive assistant to sanitorium founder the Rev. Hugh Cooper, and devoted the rest of her life to fund raising. She gradually transformed the facility from a tubercular retreat into a multihospital system. Although Van Devanter died only a year after Hinton began escorting her to the hospital, he quickly grew to admire Van Devanter's devotion to Presbyterian and its patients, as well as the lengths she went to both strengthen and preserve those links.
"I believe she (was) the core of the organization. Yet she (was) no bleeding heart; she was tough and could crack the whip if need be," Hinton says.
Van Devanter is so revered among Presbyterian's ranks that a bronze statue of her sits in the lobby of the main hospital. Last year Hinton commissioned a $40,000 video documentary as part of a campaign to reconnect the staff to her legacy. At Hinton's urging, Van Devanter's work serves as a model for Presbyterian trustees and managers. "The mainframe of our decisionmaking process is to ask ourselves, `What would Mrs. Van do?" says board chairman Stroup.
To that end, Presbyterian went full bore into the HMO business under Hinton's direction, because, as he explains it, it made perfect sense. "A hospital is a blunt instrument in improving people's health, and if we were to align incentives properly, we needed to get into the other side of the business," he says.
So far, though, the HMO hasn't enjoyed great profitability: It lost $5.3 million in 1998 on revenues of $387 million. It reported net income of $627,000 on revenues of $182.1 million in 1997 and $281,700 on revenues of $103.4 million in 1996. Presbyterian officials attribute last year's loss to the escalating cost of providing services but say the HMO will operate close to break-even in 1999.
Hinton, however, has few regrets, insisting that managed care should be viewed as a means to an end rather than as a pure business opportunity.
Hinton has also leaned on Presbyterian's foundation to improve the organization's performance. Under his tenure, the foundation chairman was given a seat on the system board, and salaried staff has been added. "Tonight Show" host Jay Leno was hired to emcee the annual $100-a-plate fund-raising dinner that took place in October, a huge risk, given his sizable fee, which officials would not disclose. The result was spectacular. Attendance more than doubled from the previous year to 2,300, a huge number for a city of less than 500,000.
Controversial decisions. Not everything works perfectly in Hinton's world, though. One of the toughest decisions he made was not to become a partner when Charlotte, N.C.-based MedCath opened the for-profit Heart Hospital of New Mexico in October.
The decision drove Presbyterian, which runs New Mexico's premier cardiac program, to drop contracts with two cardiac medical groups that aligned with the heart hospital. Presbyterian formed its own group and hired away 10 doctors from the two cardiac groups. The squabble drew negative coverage in the local papers and eventually a front-page article in the Wall Street Journal. Hinton likens the episode to an "ugly divorce."
Vincent McVittie, the heart hospital's vice president of business development, didn't hesitate to criticize Hinton. "He's a great guy, but this is one time when he's making a decision strictly on an emotional basis, with no thought of business in mind."
Hinton's jaw tightens when presented with the comments. He pauses for a while before he speaks. "It was absolutely a business response. If we had partnered in the hospital, we would create a monopoly on cardiac care in New Mexico. This is a very poor state, and having a for-profit company siphoning off all the revenues hardly seems right," he says.
While the verdict on the heart hospital's success is not yet in, other avenues Hinton has pursued have been less than successful. Financially, Presbyterian's hospitals and medical groups did not perform up to expectations last year, with net income of $13.4 million on revenues of $393 million. Net income of $22 million to $24 million had been projected, and the system typically netted more than $20 million per year in the mid-1990s. Hinton attributes the shortfall in part to Medicare reimbursement cuts, along with expenditures to build up Presbyterian's HMO. Efforts to streamline its cumbersome governance (involving more than a dozen affiliated boards) and recruit directors with more outside expertise have been slow.
Challenges ahead. Hinton himself doesn't have a clear-cut vision for Presbyterian's future. He believes the course the organization will take depends in part on how managed care evolves, whether or not alternative medicine takes hold with the general public, and the growing influence of the Internet.
"All the impediments to what is right and what is the best answer have been frustrating for him," says Stroup, although he says the obstacles have toughened and matured Hinton.
And despite all the platitudes thrown his way, Hinton is typically candid about his future. He doubts he will be able to match the long tenures of his two immediate predecessors. Ray Woodham headed Presbyterian from 1952 to 1981, and Richard Barr held the reins from 1981 to 1995.
"I don't think anyone can be a CEO that long in this current environment," he says. "When you look at all the losses in healthcare, the grass is not greener anywhere else . . . the whole industry is screwed up. It's very troubled. The very best you can do is stay focused."
Barr, now president of an Albuquerque Caterpillar dealership, continues to serve on the Presbyterian board. He was only 30 when he was appointed Presbyterian's CEO, and dryly observes that the board "has a penchant for picking young people and making them old quick."
Yet in what he acknowledges is a hothouse environment, Barr has nothing but praise for Hinton's performance, singling out in particular the tough decision regarding the new heart hospital. "Jim's responded with all the right moves-everything that needed to be done to ensure Presbyterian's pre-eminent position," he says.
James H. Hinton
President, chief executive officer, Presbyterian Healthcare Services, Albuquerque
Born: 1959, Albuquerque
Education: Bachelor's degree, University of New Mexico, 1981; master's degree, Arizona State University, 1983.
Family: Married Carol in 1982. Two children, Rebecca, 12, and Robert, 9.
Proudest professional accomplishment: Presbyterian recently receiving the "Most Philanthropic Corporation" award from the National Fundraiser Executives Society. Hinton says the award shows Presbyterian's character in the community and is an affirmation of its community involvement and commitment to be part of the solution.
Happiest moments: Time he spends with his children.