You might say that Jay Grinney was training for his new job leading HealthSouth Corp. during his part-time job in college. Grinney worked at least 25 hours per week on a farm near St. Olaf College in Northfield, Minn. He built pens and other structures for the turkeys raised on the farm. As the cold Minnesota winters approached, Grinney pulled his handiwork into the shed. He even helped with breeding birds.
Pigs were also raised on that farm. "I cleaned a lot of pig stalls," Grinney says. The farm was where he learned "that hard work is not all that bad," Grinney says. "I know that sounds kind of trite, but it's not all that bad."
Sometimes, Grinney would have to rush from the farm to a class without being able to stop at home to clean up. "No one wanted to sit next to me," Grinney says.
The lessons of farmwork may have helped prepare Grinney for what he walked into last month when he accepted the job as president and chief executive officer of HealthSouth. Grinney, 53, moved from a secure job as a top executive of now-stable HCA to the top job at a company facing civil and criminal lawsuits alleging $2.7 billion in accounting fraud.
The Columbia/HCA example
Grinney is stepping into the void left by the departure of the flamboyant Richard Scrushy, who founded HealthSouth, built it into the largest private rehabilitation provider in the world and then left under a cloud of scandalous allegations. Scrushy was forced out by the board of directors in March 2003 after federal authorities accused him of leading a conspiracy to inflate the company's profits to please investors and analysts, thereby driving the company's stock price higher and, authorities charge, stuffing his pockets as he cashed in his stock options.
Grinney is no stranger to seeing a company lose its hard-driving founder. He was a key member of the 1997 executive team at what was then Columbia/HCA Healthcare Corp. when CEO Richard Scott resigned shortly after the government revealed its sprawling probe of the Nashville-based company's Medicare business practices.
"As with HCA, I think what HealthSouth needs is some strong, principled leadership. I intend to provide that kind of leadership," Grinney says. "I think HealthSouth is a great company, just as HCA was. The quality of the organization is represented in the facilities. That's what really defines us."
HealthSouth employees have endured a shock similar to the one Columbia/HCA employees weathered in 1997, Grinney says. The Columbia/HCA employees soon realized the company wasn't the boardroom or the executive suite, it was the hospitals, he says, and HealthSouth employees should look at things the same way. "If you move the cloud of controversy away and look at what this company is really about, it's about those facilities, it's about those physicians, it's about those caregivers," he says.
Scott founded Columbia Healthcare Corp. When he left the merged Columbia/HCA, it was Thomas Frist Jr., one of the two co-founders of HCA, who took over. Grinney cites Frist as one of the biggest influences on his management style. Current HCA CEO Jack Bovender Jr. and Triad CEO Denny Shelton, a former Columbia/HCA executive, were also big influences.
"I think that's a huge benefit," says Marilyn Tavenner, who was president of HCA's Richmond, Va., market when Grinney became Eastern group president. "He watched both Tommy and Jack and what we did with ethics and compliance in terms of a company to get that message out to every level of the company. He learned and participated in doing it right."
But it was someone from Grinney's first full-time job as a healthcare manager who perhaps had the biggest influence. After Grinney joined Methodist Health Care System, Houston, in the early 1980s, he got to know Rush Schneider, CEO of the system's Baytown (Texas) Medical Center, now known as San Jacinto Methodist Hospital.
Making the switch
Grinney started at Methodist on a fellowship in 1981 after completing both the MBA and MHA programs at Washington University in St. Louis. When his fellowship was up, he became assistant vice president of the diagnostic and therapeutic services division. In 1985, he became senior vice president of TMH Services, a subsidiary of Methodist that sold ancillary services back to the system's hospitals.
In the meantime, Schneider and another Methodist executive, Dave Colby, had moved to Columbia. In 1989, they came calling with a job offer in El Paso, Texas, but Grinney wasn't interested in El Paso. A year later, however, Columbia was in the midst of a deal to buy three hospitals, including two in Houston.
One of the Houston-area hospitals, Rosewood Medical Center, didn't have a CEO. Now they had the right fit, and Grinney accepted, leaving behind the not-for-profit hospital world.
"I didn't need to be persuaded," he says. "I knew the guys there at Columbia. I had an opportunity to meet Rick Scott and David Vandewater (then Columbia's chief operating officer) and really was very comfortable making that transition."
On a day-to-day basis, Grinney sees little difference in what for-profit and not-for-profit healthcare providers do, but there was one crucial area that he appreciated.
"I found that moving into the for-profit arena was very liberating," Grinney says. "We were given a lot of responsibility and authority. We weren't second-guessed by a board of directors who may or may not have had the experience to guide us. It was a very exciting change for me."
After two years at Rosewood, Grinney moved to a job in Columbia's Houston regional office, eventually becoming president of the greater Houston division in 1993. In 1996, Grinney became president of Columbia/HCA's Eastern group, a job he kept until he became HealthSouth's CEO.
Hands-on, if necessary
Being a group president at Columbia/HCA brought the same level of hard work as being a hand on a turkey farm in Minnesota, but with nicer clothes and less pungency.
Tavenner continued to work with Grinney in the Eastern group as president of the Central Atlantic division. Just a few months before Grinney left the company, Tavenner was named president of HCA's newly formed outpatient services group, so she and her former boss could be butting heads soon. "We chuckled about that before he left," Tavenner says.
"He's a great boss," she says. "Jay was a good mentor for me. I think what I learned to respect most about him was that he had the ability to think strategically and move an agenda. His strength is he's very direct."
About two years ago, Tavenner says, Grinney's agenda was cutting the use of contract nurses. "We had markets where our retention rates and nursing recruitment were out of whack," she says. "We were gaining a little bit at a time but not making big headway."
As Tavenner recalls it, Grinney told his managers, "We don't need a consultant. We have the ability to do this. We have management engineers in place. Let's make changes in work schedules and pay." With a renewed focus on the problem, the Eastern group reduced its use of contract labor by 30% and cut its nurse turnover rate from 20% to about 12%, Tavenner says. "He clearly conveys the messages of what's important to succeed, and in a good way," she adds.
Tavenner and Grinney also remember a special meeting that Grinney called on a Sunday in Hartsfield-Jackson Atlanta International Airport. It was during the early stages of the turnaround at HCA, but the Eastern group hospitals were in the summer volume doldrums. "We were not hitting our numbers," Grinney says.
Grinney and his wife, Ellen, had been planning to take a long-anticipated trip to London with their best friends from Houston, but Grinney canceled the trip and flew to Atlanta instead. Hartsfield-Jackson was chosen because it was the one airport that all the executives reporting to Grinney could reach on a nonstop flight, Tavenner recalls.
"We spent the day talking about volume-building initiatives. Jay would pick five or six initiatives and home in on those," Tavenner says. "We understood what his important objectives were and therefore what our important objectives were."
"If the situation warrants," Grinney says, "I will be very prepared to be very hands on" as HealthSouth's CEO.
"Over the next 12 months," he says, "the most important and the broadest objective is to restore the credibility of HealthSouth and reclaim its position as a pre-eminent provider." The company can take big steps toward that goal every time it puts another piece of the past behind it-the government investigations and its dispute with bondholders, especially, he says.
One advantage Grinney sees is that turnaround firm Alvarez & Marsal, which was hired in the immediate wake of Scrushy's departure, has already done a lot of the pruning, cutting corporate staff and selling some assets. As a result, he doesn't envision any large-scale divestitures.
Grinney is planning a fact-finding tour of the company's main facilities during his first 100 days on the job, to meet employees and get a better sense of HealthSouth's strengths and weaknesses.
HealthSouth can count on the same sunny forecast that HCA relies on: a growing, aging population, particularly in Sunbelt markets, Grinney says. "All those orthopedic, stroke and other patients have to be discharged to a post-acute center, and we want to be that center," he says.
If his hard work accomplishes that, then no one will mind sitting next to Grinney.
'Over the next 12 months, the most important and the broadest objective is to restore the credibility of HealthSouth and reclaim its position as a pre-eminent provider."
--Jay Grinney, president and chief executive officer, HealthSouthCorp.
Birthplace: Racine, Wis.
Family: Wife, Ellen; three children
Education: St. Olaf College, Northfield, Minn., bachelor's degree in psychology, 1973; Washington University, St. Louis, MBA and MHA, 1981
Previous jobs: President, Eastern group, HCA 1996-2004. Worked in Houston for HCA and Columbia Healthcare Corp., from 1990-1996, first as a hospital chief executive officer, then as chief operating officer of the Houston region and finally as president of the greater Houston division. Worked as an executive at Methodist Health Care System, Houston, 1982-1990. As a high school student, he worked at a hospital in Racine.