Life Savers

Two of the country’s world-class hospitals write their prescriptions for success

By Anne P. Dela Cruz

Health is wealth. Those in the medical profession and health care business know this all too well. In the area of caring for people’s health, two hospitals in the country can now compete with the best medical facilities in the world. These are St. Luke’s Medical Center and The Medical City.

St. Luke’s president and CEO Jose F. G. Ledesma and The Medical City president and CEO Dr. Alfredo R. A. Bengzon share the challenges that they confronted and the strategies they adopted to raise to the highest levels the quality of service offered by their facilities.

St. Luke’s Medical Center

St. Luke’s Medical Center’s vision is to be one of the top five hospitals in Asia by the year 2010

Most hospitals have a medical professional team at the helm. St. Luke’s is one of the few exceptions. Jose Ledesma, a management professional, started his career in the hospital in 1981 as hospital manager. In 1996, he assumed the post of president and CEO. St. Luke’s was originally owned and operated by the Episcopal Church of the Philippines. Over the years, the hospital became run-down and was on the verge of bankruptcy. Thus in 1975, the church decided to turn over the hospital to an independent board and convert it into a non-stock, non-profit corporation. William Quasha became St. Luke’s first chairman, president, and CEO, positions which he held until his death in 1996. Quasha played a key role in the transformation of the hospital. St. Luke’s, which generated P18 million in revenues in 1980, is projected to earn P4 billion this year.

“When I joined St. Luke’s in 1981 as hospital manager, we had 200 beds,” recalled Ledesma. “The hospital was just breaking even and we started to just gradually improve.

Starting as hospital manager in 1981, Jose Ledesma became St. Luke’s Medical Center’s president and CEO in 1996

Among the first things that the new management did was to increase prices because the hospital’s fees were too low. The extra margins were used to upgrade the hospital in terms of new equipment and facilities, recruit younger medical experts, and improve the hospital’s physical structure.

“Because we were plugging a lot of loopholes, we were able to keep costs down. Revenues grew at a very fast rate,” Ledesma said. “By the late 1980s, our improvement program in the areas of expertise, facilities, and technology had already propelled us to the leadership position in the country in terms of health care. It is a position we have maintained in spite of the opening of two new hospitals.”

With an annual budget of P500 million to P600 million for equipment and facility improvement, St. Luke’s long-term goal is to be known as the leader in every field of medicine in this part of the world. “Right now, we’re the leader in many areas, especially in cancer, cardiology, neurosciences, gastrointestinal and liver diseases, and many other areas,” he said. “Our new vision is to be one of the top five hospitals in Asia by the year 2010.”

St. Luke’s is slowly realizing its vision. In 2003, the hospital became the first locally managed medical facility and just the second in Asia to be accredited by the Joint Commission International (JCI) in the region. The JCI is the international accrediting subsidiary of the US-based Joint Commission on Accreditation of Healthcare Organizations (JCAHO), the oldest and largest health care–accrediting body in the U.S. The accreditation assures patients that the standards of health care at St. Luke’s is comparable to, if not better than, JCAHO-accredited hospitals in the United States. St. Luke’s is also an affiliate of the New York-Presbyterian Hospital and two Ivy League medical schools, the Columbia University College of Physicians and Surgeons and the Weill Cornell Medical College University.

St. Luke’s recently added another feather to its cap when it was selected by the prestigious Memorial Sloan-Kettering Cancer Center of New York as its only Philippine affiliate. “In cancer, this is an affirmation of the fact that we have the best and the most comprehensive cancer facility in this country,” Ledesma said.

St. Luke’s has also made great strides in the the upgrading of its medical equipment. It recently acquired a positron emission tomography (PET) scanner, which is available in only 5% of American hospitals. It is the first device to measure the body’s functions down to the molecular level compared to older devices that just image body organs. By creating a picture of how the human body works, the PET scanner allows doctors to detect problems at a stage much earlier than the usual X-ray or other imaging technologies. “Having state-of-the-art equipment enables our doctors to arrive at earlier and more accurate diagnoses, thus providing earlier and more effective treatment for patients,” Ledesma explained.

The presence of such modern equipment also helps entice Filipino doctors based abroad to return to the Philippines to practice their profession. “We are making available to doctors a good place to practice medicine,” Ledesma said. “Almost anything you will see in the U.S. or in other Western countries, you will have in St. Luke’s. In many cases, we have better equipment than most hospitals in the U.S.”

St. Luke’s has also been aggressive in the career development of its medical staff. The hospital sends at least 30 doctors to other countries for training every year and these courses can last anywhere from one week to three years.

Ledesma attributes St. Luke’s success to the fact that it is one of the very few hospitals in the country that is not run by a doctor. “St. Luke’s is run professionally and we do not look at doctors as gods. We run a tight ship,” he said. “While we want to please our doctors, we also make sure that every doctor in the hospital follows the rules and practices with the highest degree of professional ethics and integrity.”

He describes himself as a dictator, which does not sit well with some of the doctors. He announced that the hospital is in the process of pruning its list of doctors from the present 2,000 to 1,200-1,300. “We have started dropping doctors who are not really active with us in terms of bringing in patients or supporting the hospital,” Ledesma said.

Recently, the hospital’s board decided to open another St. Luke’s at the Bonifacio Global City in Taguig. The Fort Bonifacio area abounds with the hospital’s target markets – the A, B, and C markets. Excavation work has already started and the new St. Luke’s is scheduled to be operational by July 2008 with 600 beds.

The Medical City

The Medical City is a testament to the Filipino as designer, builder, caregiver, health professional, manager, and visionary

The Medical City formally commenced operations at its new location along Ortigas Avenue in October 2004. Looking at the impressive and massive complex, it is hard to imagine that the hospital had experienced serious financial, organizational, and resource problems.

“We have faced a strike, all sorts of management and labor problems, and we have overcome all of these,” said Dr. Alfredo Bengzon, The Medical City president and CEO since 1996. “If you check with the Securities and Exchange Commission now, you will not be able to find a hospital of our kind that can be more financially rewarding than we are now.”

The Medical City first opened in 1967 in its old site at the corner of San Miguel, St. Francis, and Lourdes Streets in Mandaluyong City. It was set up through the efforts of a group of doctors, including Bengzon, who got together to pool their resources.

It was not long after that the hospital started experiencing difficulties. Bengzon and company realized that they needed to bring in professional managers to help them run the hospital. “It wasn’t very easy for us because the people in charge of management were our mentors, and in those days, you did not challenge your superiors,” he said. “But we recognized early on that we could distinguish between personal feelings and corporate responsibilities.”

That decision to bring in professional managers proved to be a turning point for the hospital as it was the start of The Medical City’s recovery. The late Augusto Barcelon took the lead in the rehabilitation program.

Tapped to undertake an administrative job at The Medical City, Dr. Alfredo Bengzon was forced to pursue a master’s degree in business administration

Bengzon believes the coming together of medical and management expertise is what distinguishes The Medical City from other hospitals. Bengzon himself is the epitome of this unity of medical and management skills. Bengzon began his medical practice as a neurologist in the early 1970s. When he was tapped to undertake an administrative job at the hospital, he was forced to pursue a master’s degree in business administration at the Ateneo Graduate School. “The training served me well not only in my administrative job but it also made me a better doctor,” he said. “It gave me a better understanding of the health sector and its relation to the bigger society. Little did I know that it prepared me well to become the secretary of health.”

Former President Corazon Aquino picked Bengzon to be her health secretary. Towards the end of his term, he was invited by then presidential candidate Fidel Ramos to join his senatorial slate.

Using Bengzon’s experience as a model, The Medical City institutionalized the same approach in the hospital’s training programs for personnel. In November 2004, a group of 25 medical and nonmedical personnel started earning their master’s degree in management from the Ateneo School of Business under a scholarship from the hospital. The nonmedical staff are full scholars, while doctors are 75% scholars.

A month after he was appointed The Medical City’s president and CEO in 1996, Bengzon met with the heads of the operating units, requiring them to meet with their people to prepare a vision for their respective units. The units had three guidelines. First, they would be working on a 15- to 20-year time frame. Second, they would have to pay attention to global and domestic trends in terms of not only the services that the unit offers but also within the context of the broader health sector. The last guideline was that they would have to keep an eye on the competition. The units were given a month to present their visions.

Bengzon organized a task force that reviewed and summarized the outputs of all the units. These were then returned to the operating units for review and final submission. After management synthesized the operating units’ own visions into an overall vision for the hospital, Bengzon met with engineers and architects who brought in FLAD and Associates from Madison, Wisconsin, as management consultants.

“They were very impressed with what the operating units submitted. After they visited another hospital, they told me that The Medical City was a better hospital because of its people sense,” he said. Bengzon explained to the consultants the reasons why The Medical City had this people sense. Since the hospital did not have enough material assets, its whole being and character were built on the human resource. “It’s a good asset around which to build an organization,” he said. “The entire exercise also showed that we in this country have the ability and the capacity to do something that can stand side by side with the best the world has to offer.”

Before transferring to the hospital’s new site, Bengzon undertook an organizational development and transformation (ODT) study for the hospital which had three major components. The first component was a process review, where a team studied all hospital processes (some 400 of them) and then recommended more efficient and effective processes that would be implemented upon transfer to the new site. The second component was a culture scan, which dealt with hospital personnel – how they felt about their job, the people that they worked with, and other personal-related issues. The third component was a competitive scan, which looked at The Medical City’s competitors.

“There was a six-month diagnostic phase. The diagnosis generated an action plan,” Bengzon said. “Part of that action plan was to develop scripts for our personnel to use. I don’t believe that you will find hospitals making investments in those kinds of undertakings.”

In addition to providing compassionate service and championing the primacy of the human resource, another Medical City core value is client partnership. Bengzon is a firm believer that the objective of health care is to prevent people from becoming sick. With client partnership, the health providers at The Medical City make sure that patients are informed of their symptoms and how they can overcome them. “We are setting up a Center for Patient Education where we will teach people how to better understand their symptoms and their diseases,” Bengzon stated.

From a 300-bed hospital, The Medical City now has 500 beds. As Bengzon stated in his inaugural speech at the new site, the new structure is more than a transfer of address or a physical makeover. It is about organizational transformation: “This is about clarifying our vision and values and then enlivening these in everything that we are and everything that we do. Over the last few years, even as we have been concerned with moving earth, pouring cement, and laying tile, we have meticulously and systematically redefined our structures and systems, re-engineered our processes and programs, and renewed our attitudes and actions, all to achieve better alignment with our institutional imperatives.”

According to Bengzon, he is offering The Medical City as a testament to the greatness of the Filipino – as designer, as builder, as caregiver, as health professional, as manager, as visionary. He added, “Even as we attend to the personal health needs of our patients, we are focused on the real prize – health as the fundamental good in defining life and its quality, and hence an extremely potent force in pursuing social reform and achieving equitable development.”

When asked about his future plans for the hospital, Bengzon referred to the balanced scorecard strategy, which calls for the harmony of a number of concurrent factors. These factors will include internal business processes, the perspective of clients, the perspective of shareholders, and the perspective of doctors. When harmony is achieved among these different perspectives, then The Medical City will have been able to achieve its objective of having the “patient on the center stage” and providing “service of greater worth.”

The two cases of St. Luke’s Medical Center and The Medical City prove that business principles like professionalism, continuous upgrading and innovation, and acknowledgement that people are the most valuable resource are as important in this sector as they are in a typical manufacturing, banking, or trading sectors. Prescriptions for success, after all, are universal.

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