Beacon Gets Inside Look at FedEx

After some bad weather and multiple delays through Chicago, a team of 12 Beacon leaders made their way to Memphis for an overnight tour of FedEx’s largest distribution center in the world. Why? “When other industries are known for excellence, there are things for us to learn,” says Beacon CEO Phil Newbold.

This innovisit, as Beacon calls it, was put in place to learn more about how Beacon Health System could understand and improve its logistics and standardization. If you add inpatient, outpatient, physician visits, ER and urgent care visits, Beacon handles over 1 million customers each year. “That is a large number,” says Lori Turner, Chief Marketing, Innovation and Experience Officer. “Beacon provides excellence in care interactions, but has lots of room for improvement with logistics. Navigating patients efficiently through sites of care could be designed to improve life for Beacon team members and improve the experience for customers.”

Steve Eller, Lori Turner, Diane Maas, Sarah Paturalski, Greg Piper, Cindy Hayes, Larry Tracy and Jeff Costello pause at 2 a.m. in front of a FedEx 777. The Innovisit, that included an overnight tour of operations followed by a day of meetings, was also attended by Phil Newbold, Mark Warlick, Dr. Vince Henderson and Greg Conrad.

According to Steve Eller, Beacon’s Chief HR Officer, “It was amazing to see the synchronization of 7,000 employees sorting 1.5 million packages over just a few hours, then coordinating with ground crews to load and perfectly balance FedEx aircraft, in time for air traffic control to take off and guide 150 planes to points across the globe.”

Mark Warlick, Beacon’s Chief Information Officer, had this to say: “It was exciting to see how systems integrated seamlessly with FedEx personnel, supporting their every move they made and tracking detailed metrics every single step of the way. This kind of thinking and rigor will help the IT team consider how we can help create smart systems for our future.”

“The level of standardization was great to witness. It’s the key to operational clarity,” says Greg Piper, Executive Director of Purchasing and Supply Chain. “We have huge opportunity to accelerate the standardization efforts at Beacon.”

During a presentation by FedEx leaders the next day, Greg Conrad, President of Beacon Health Ventures, asked about a huge improvement in performance between 2013 and 2014. The answer was threefold. First, they invested in new equipment that could transport more cargo with greater fuel efficiency. Second, they eliminated waste. (One example was by more efficiently managing the takeoff of the jets, which reduced engine run time of jets on the ground, reducing fuel cost.) Third, they identified and eliminated duplication of effort in literally hundreds of areas. So, even FedEx, a company known for standardizing on a worldwide scale, found room to improve over the last several years, to the tune of several billion dollars.

“Everyone in the FedEx chain knows exactly what to expect from the process,” says Sarah Paturalski, Executive Director of Nursing for Memorial. “I could see where Beacon could improve using this type of acceptance around standardization. We would benefit from thinking and acting more like a system.”

Larry Tracy, Memorial Hospital’s new President, agrees. “Our community is counting on us to get this right. Managing cost and efficiency together is so important to Beacon meeting its mission well into the future.”

With the overnight tour ending around 3 a.m., the Beacon team was greeted by a hotel that had lost power due to a blown transformer. After some quick action to find accommodations (a Hampton Inn with power was close by), the team enjoyed about three hours of sleep, grabbed a quick breakfast in the lobby and returned for a day of discussions. FedEx leaders spent the better part of Tuesday covering the FedEx approach to culture, brand, quality, service, customer feedback and even health care logistics.

“FedEx employees take a high level of ownership in the company culture,” says Jeff Costello, Beacon’s Chief Financial Officer, “Their level of individual accountability and empowerment to do the right thing for the customer is off the chart.”

FedEx invests in something called culture-shaping, and with an employee attrition rate of less than four percent, it has paid off for them. FedEx culture begins with what they call The Purple Promise, where each employee pledges to make every FedEx experience outstanding.

Sarah further described the culture: “Upon arriving at the hub, I was struck by the pride that emanated from their team members. It was clear that our FedEx tour guide Steve was proud of where he works, and we witnessed this same enthusiasm as we listened to FedEx leaders the next day. The FedEx culture is something to behold … they believe in themselves and in turn their professional pride in the organization abounds. Each FedEx employee holds themselves accountable for the customer experience … this seems to be the prize!”

“I was impressed with their customer feedback loop. They monitor feedback daily and weekly and move quickly to make certain mishaps are quickly corrected, and processes are put in place so it doesn’t happen again,” says Diane Maas, Beacon’s Vice President of Managed Care. “Their sense of accountability to each customer is refined. In fact, at FedEx, their customers define quality.”

Vince Henderson, President of Beacon Medical Group, found this interesting. “With health care customers, we have to assume that excellence in clinical quality is a baseline. Customers expect this from us at a minimum. We have the opportunity to understand more about how our customers define quality, and then design to deliver around customer expectations. It’s a whole new world.”

Cindy Hayes, Executive Director with Beacon Medical Group, agrees. “Our medical group is very much in a retail business, and we can learn from the FedEx approach.” FedEx employees and location managers across the country understand that they are part of a chain of quality and they are in total sync when it comes to meeting customer expectations.

In fact, Quality Driven Management (known at FedEx as QDM), has six focus areas, which, compared to Beacon’s Operating System, has striking similarities.

“Beacon has its sights on the right targets,” says Phil. “Our opportunity is to add focus and discipline around our operating system, and improve business processes and quality as defined by the customer. We are entering another layer of change. Visits like this one will help us get there faster and more gracefully.”