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A Medical Mentor

Beaumont’s Gene Michalski reflects on his decades-long career

By Dawson Bell

Pages 20 – 23

Gene Michalski, CEO of Beaumont Health, snared his first job with Royal Oak-based Beaumont while still in college at Wayne State University. A couple of college buddies were working in a lab there and told him there might be an opening for the biology major – who was working on a master’s degree in biology with a concentration in physiology – as a phlebotomist. That was in 1971. Once he earned his master’s degree in 1973, Beaumont made him a supervisor in the lab. And he’s been a health care administrator ever since.

Those two pals from Wayne State said Michalski went over to the dark side, the CEO joked. More than 40 years later that career will end with Michalski’s retirement and the ascension of new CEO John Fox. Michalski, who later earned an M.B.A. in finance from WSU, spent all but five of those years at Beaumont. And he’s seen a lot during that time.

“Medicare as we know it didn’t even exist,” Michalski said of the outset of his career.

The change from cost-reimbursement payment models to fee-based systems driven by government insurance programs has been transformational, he said, and ongoing.

The current adoption of practices brought on by the Affordable Care Act may be the most sweeping yet. Much of that transformation has been salutary, Michalski said, a renewed focus on prevention and wellness instead of acute care for untreated conditions, and an increased emphasis on consumerism and transparency. The attempt to align financial incentives with health care outcomes is all good, he added.

On a more direct level, Michalski said he’s also witnessed – and tried to promote – changes in health care management practices during his tenure as a top executive. In the early days, he explained, medical care was very hierarchical and top down, but has become much more collaborative over time.

“It’s one thing to tell, one thing to sell,” Michalski said. “It’s another thing to partner.”

Beaumont, and the industry at large, has adopted management practices pioneered by the nuclear and airline industry, moving from command-and-control operations to more team-based and safety-oriented approaches.

In the modern operating room, Michalski explained, everybody participates in making sure they get it right. “We have checklists just like airline pilots,” he said, adding that it’s not just giving orders.

“Followership has become important. Everybody benefits from that.”

As an administrator, he’s also had to navigate the changing landscape of competition in health care, and the trend toward consolidation. Contemporary health care is a very capital-intensive industry, with massive investments in technology and highly skilled personnel, Michalski said.

Making those kind of investments has become increasingly difficult for institutions that don’t have significant infrastructure and a wide geographic reach. His goal as a Beaumont executive has been to try to improve quality and safety, while reducing costs in all areas by reengineering the patient care experience. He likened Beaumont’s “backroom” operations to those of retail giants like Costco, which use scale to drive costs down.

“We literally buy boxcars worth of stuff (for health care operations),” Michalski said, which allows the management team to concentrate on improvements in patient care.

While Michalski was COO, Beaumont acquired Grosse Pointe-based Bon Secours Hospital and its affiliated nursing and assisted-living facilities in 2007. And started the medical school and launched an aggressive ambulatory care strategy.

In 2014, Beaumont, Oakwood Healthcare of Dearborn and Botsford Hospital of

Farmington Hills announced a megamerger, creating the largest hospital network in Southeast Michigan, with nearly $4 billion in annual revenues. But Michalski is quick to point out that bigger is not always better. “Sometimes it’s just bigger,” he said.

He believes the unification of the geographically diverse institutions has already paid dividends (e.g., the consolidation Beaumont’s debt that was available through the affiliation coming together, which saved $13 million), and will continue to deliver higher quality, more cost-effective health care for years to come.

A financially stable system of quality health care organizations is also absolutely critical for the overall prosperity of the region, Michalski said. Health care is a key component of the local economy – a nearly $30 billion industry in Southeast Michigan – employing hundreds of thousands of well-paid workers. Beaumont itself is Oakland County’s largest employer.

Spending on health care largely stays in the community, multiplying its economic impact. In addition, thousands of other Michiganders contribute to the system as volunteers, he said, amplifying the connection between health care and the community, which is vitally important for the region’s growth.

“Why do people move to certain areas?” Michalski asked. “Jobs, a good transportation system, quality schools. But health care is right up there.”

Indeed, Michalski is something of a health care evangelist, touting the industry’s myriad contributions to a healthy community. Health care organizations are obligated to be “good corporate citizens,” providing millions of dollars each year in charity care, being active participants in community organizations and local economic development. Michalski himself is a member of the Detroit Regional Chamber’s Board of Directors.

That is especially true of those organized as nonprofits, he said, like Beaumont Health. “The communities own these nonprofit hospitals,” Michalski explained. “We serve the whole community.”

By the end of May, Michalski’s decades long service as a Beaumont executive will end, but he said he expects to remain active – both in health care and in the community. With two grandchildren in Minneapolis, Minn., and another on the way in Boulder, Colo. Michalski said he also expects to travel a bit more. But the trail from phlebotomist to CEO is wrapping up, and Michalski can rightly say he’s glad he took it.