Hrdcs - Mmc Project Case Study 7 08.pub

THE CHALLENGES OF STRATEGIC PHILANTHROPHY AT MEHARRY MEDICAL COLLEGE, FY 2002 MEHARRY MEDICAL COLLEGE TEAM BUILDING CASE STUDY

Case Project Written by: Charles J. Hicks, II, Ph.D. HRD Consulting Services Perspectives on Meharry Medical College Founded 125 years ago, in 1876, Meharry Medical College is an internationally recognized leader in health professions training and health disparities research among African Americans and other underrepresented minorities. Located in Nashville, Tennessee, Meharry is a private institution comprised of four professional schools: Medicine, Dentistry, Graduate Studies & Research, and Allied Health. Meharry’s three core businesses are teaching, research, and the clinical enterprise. The total enrollment is 910 fulltime students. Meharry has operated with a low tuition revenue base (reflecting its mission), subsisted with modest levels of annual gifts and a small endowment (reflecting a historically undercapitalized research infrastructure), and supported a patient care enterprise that required institutional subsidies rather than contributed to the financial health of the College (reflecting both its mission and inadequate public funding support). With small to negative operating margins, no operating reserves, and a meager endowment, Meharry frequently found itself petitioning others for financial support in order to survive. Today, an academically strong, fiscally sound, well managed, and visionary Meharry is poised for its most far-reaching advancement in years. Meharry has clearly defined its niche and aggressively is seeking new friends, strategic partners, and investors. Uniqueness of Meharry Medical College The College’s primary mission of training African American health professionals distinguishes it from the vast majority of educational institutions. Specific numbers best illustrate Meharry’s achievements: The College has graduated more than 3,400 physicians and over 1,200 dentists over the last fifty years. These providers are culturally sensitive professionals who are committed to providing care to the underserved. Over 50% of all graduates work in underserved urban centers and rural communities, caring for economically disadvantaged people who lack access to quality, affordable services. Current Capability (strengths) and Risks (vulnerabilities) The Educational Enterprise at Meharry has always operated with a low tuition revenue base, by choice. Meharry has a very small endowment, only one-tenth the size of the endowments of the average of all U.S. medical schools. The College receives a modest level of annual, unrestricted gifts from its alumni and friends. [email protected] / 410-466-9023

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THE CHALLENGES OF STRATEGIC PHILANTHROPHY AT MEHARRY MEDICAL COLLEGE, FY 2002

The absence of endowments for faculty positions, student financial aid, and key infrastructure components such as the library, that are found in most private academic health science centers put Meharry’s educational enterprise at a distinct disadvantage. Meharry’s financial structure is actually more similar to that of a small public college, without the usefulness of a state government appropriation. Meharry’s educational revenue base has been and continues to be dependent on Title III funds from the U. S. Department of Education, and Centers of Excellence funds from the U. S. Department of Health and Human Services. Consistent with its mission, Meharry’s Clinical Enterprise has focused primarily on providing care to Medicaid and uninsured patients. Until recently, Meharry did not receive public support from local or state governments to help subsidize indigent care, nor did it have higher forms of reimbursement to cross-subsidize uninsured indigent patients or to support education and research missions similar to that at most academic health centers. Today, Metropolitan Nashville General Hospital is located on Meharry’s campus. The clinical faculty of Meharry provides the physicians who are staff at MNGH. The Research Enterprise suffers from a number of shortcomings. First, small to negative operating margins and results force Meharry to use scarce unrestricted philanthropic gifts for operating expenses rather than applying those revenues toward endowment or other forms of investment in the research infrastructure. Revenue limitations -- in particular, endowment and clinical income -- also have prevented pursuit of attractive grant opportunities. Many RFPs are unanswered because Meharry cannot generate required philanthropic matching funds or institutional support. Proposed Five to Ten Year Strategic Philanthropic Initiative Historically Black Colleges and Universities (HBCUs), including Meharry Medical College, have sought philanthropic support not as a strategic objective to assure excellence, but as a tactical necessity in order to stay open. The pursuit of strategic objectives, based on comprehensive financial planning tools, is a relatively recent phenomenon at HBCUs. The best strategic fundraising occurs when the importance of raised monies is understood as one contributor to the overall financing of an institution, as opposed to being viewed as the “icing on the cake”. Presently, Meharry has an endowment of $69 million of which $25 million is invested in marketable securities. Academic institutions consider their restricted and unrestricted endowments as reliable sources of funds to help finance the entire range of their operating needs. Furthermore, most academic institutions strive to establish the level of endowed funds at 2-3 times the size of their operating budgets. The fiscal year 2002 operating budget at Meharry is $102 million. The proposed strategic philanthropic initiative is to increase Meharry’s unrestricted and restricted endowments to $300 - $350 million over the next 5-10 years. In 1997, Meharry embarked on a seven-year campaign to raise $125 million. To date, $65 million has been raised and $50 million in cash has been received. Of the $50 million in cash received, $16 million has been added to the endowment. [email protected] / 410-466-9023

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THE CHALLENGES OF STRATEGIC PHILANTHROPHY AT MEHARRY MEDICAL COLLEGE, FY 2002

OVRERVIEW & STATUS OF CONSULTING SERVICES

Given Meharry Medical College’s history, uniqueness, the current capability of its three Enterprises, the promise of its overall future relied heavily upon the leadership demonstrated through the Division of Institutional Advancement in successfully implementing and achieving the goals of the proposed five to ten year Strategic Philanthropic Initiative as outlined by Garvin S. Maffett, Ed.D, Vice President of the Division of Institutional Advancement. First, since January of 2002, the Division of Institutional Advancement had undergone a reorganization in the composition of the senior management staff, and as well, in its organizational structure. The organizational structure and senior management staff composition both reflected a leadership commitment and a state of preparedness for addressing the future challenges and requirements for implementing and achieving the goals of this Strategic Philanthropic Initiative. Secondly, to facilitate the Division’s transition, two team-building sessions were conducted to assist in preparing a state of readiness for change; assist in the infusion of new staff members; enable the operation of the new organizational design; and, to immobilize the team’s commitment for the revised Divisional vision/mission statement, the new ground rules for staff engagement, and the current campaign goals. In addition, the Team Retreats were used to build support and begin the process for formulating and launching a five year strategic plan that will be backed-up with annual operating plans for each of the five Departments within the Division of Institutional Advancement. Thirdly, a new set of performance indicators were identified that would be used to monitor progress against the targets of the Strategic Philanthropic Initiative. Those performance measures were: Return on Assets, Profitability, Sales Revenue Generated, Market Share, Quality of Service/Products, and Employee Satisfaction. Fourthly, each Department would have in place an annual operating plan with key performance indicators that would drive team and individual performance outcomes. These plans would detail specific measurable performance indicators that are linked with team and individual performance targets. In addition, a parallel financial incentive system would be formulated whereby Divisional individual and team performance standards will be integrated into Meharry’s performance appraisal system and linked to each employee’s annual individual performance plan. The intent of this system was to differentiate between those performance standards that “meet expectations” from those that “exceed expectations,” emphasizing a performance based criteria that “rewards for results delivered” vs. the somewhat usual criteria that emphasized rewards for

[email protected] / 410-466-9023

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THE CHALLENGES OF STRATEGIC PHILANTHROPHY AT MEHARRY MEDICAL COLLEGE, FY 2002

the “level of effort dispersed.” It is also necessary for management to differentiate and highlight the rewards for results derived through team efforts as well as the achievements derived through the individual initiative of individual team members. To establish a benchmark for monitoring the progress of Divisional and Team performance against goals over time, an additional management tool was put into place. The Denison Organizational Culture Survey is a diagnostic management tool that aligns leadership strategies, team performance, and organizational culture traits to bottom-line financial performance measures. This instrument was administered to the full staff, and given the 88% completion rate a presentation of the report was made to the Senior Management Team for their discussion, review, analysis, strategy planning, and implementation. This report provided a baseline benchmark that compares the Division with other high performing organizations whose profiles are found in the third and fourth quartiles. As well, it provides a diagnostic analysis of the Division’s current capability and potentials, strategic leadership insights, identification of strengths, the critical management levers, and the team initiatives that would provide an opportunity for realizing the desired performance standards at the departmental, team, and individual levels in the Division of Institutional Advancement. As such, to date, this process has provided the leadership of the Division of IA with a context for doing strategic and operational planning, a database for strategy formulation and deployment, a process for energizing a cohesive team, and a game plan for creating and managing the desired future of the Division. These interventions were designed to have an impact at the management, team, and operational levels within the Division of Institutional Advancement. The quantified benefits of this series of organizational interventions were projected to realize a 30% improvement factor across the Division and it was anticipated that this would begin to be realized during the second and third quarter of FY 2002. Such improvements should be observable and measurable and are likely to begin manifesting in both behavioral terms (team cohesion and individual staff member’s drive for results) as well as in quantifiable measures regarding daily internal operational efficiency (innovative problem solving, advance planning, and increased efficiency in meeting deadlines) within the Departments of the Division. Since this expectation was declared at the outset, the recommended go-forward strategy was for the Senior Management Team to discuss and clarify their expectations with their team members, and to define and set improvement (stretch) targets/goals that would be tracked and monitored as an overall measure of the Division’s operational performance and effectiveness on a daily, monthly, and quarterly basis.

[email protected] / 410-466-9023

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