Quality is a squishy concept, especially quality in services. Stifler's model has shown him that quality pays off in a program that grows larger by itself. However, that model doesn't help him discriminate between a dollar invested in quality and one wasted in quality's name. Even here, though, Stifler uses numbers.
As part of their behavior-modification training, patients keep track of all sorts of things -- the number of calories they consume and the number they work off in exercise, for instance. Clinics keep track of these numbers and others, such as average weekly weight loss and the quantity of liquid-diet supplement each patient buys. Yes, one aim is to monitor individual patients' progress, but another is to check the clinic's performance. "You can look at those numbers and without even talking to patients know whether they're in trouble," says clinician Gable. At the same time, "the quality-control data lets us see that we have a problem before it shows up in attrition," says Povall. And it shows where the problem is. You know which patients are failing, and you know who instructs them.
Numbers are diagnostic tools, but they can't solve problems by themselves. That takes people. Stifler tries to instill in the people who work with him an appreciation for the limitations as well as the capabilities of mathematical models. "There is a point," says McFadden, "beyond which numbers aren't useful. Telling a clinician, for instance, that she's a 6 [out of 10] on average isn't useful. You've got to show her how to overcome the things that are limiting her."
Models can't offset bad attitudes, and they won't work if there's no agreement on goals.
HMR, for instance, spends tens of thousands of dollars on air travel every month for trainers and for salespeople who call on hospitals and other health-care institutions. The model helps management keep tabs on those costs, but it doesn't ensure that people fly at the lowest possible fares. That takes planning: training sessions are scheduled months ahead of time, allowing advance purchase of tickets. It requires attitude: everyone at HMR who chooses to -- and that's all but 8 out of nearly 300 employees -- gets a large share of his or her compensation through profit sharing, so the less spent on airplane tickets (or anything else, for that matter) the more profit there is to share. And it requires enlightened thinking: "This may look like a pressure just to cut costs," says Povall, "but it's not. A big part of the job is to recognize that there is a link between dollars spent and effect achieved." Of course, it's the understanding the models bring that enlightens people's thinking.
His way of looking at a business probably wouldn't work, Stifler says, in a public company with shareholders whose only interest was quarterly profits or in a unionized company in which the union's goal is to grab as much for its members as it can. Or, he might have added, in a firm where management's goal is to maximize its own take, unions having no monopoly on greed these days.
The next day Stifler was feeling better, and by the third day, he allowed, he was himself again. He not only walked to work, he worked out. And whatever flu-induced restraint he'd shown on day one had been banished with the bug. "Write this down," he told me, as if he thought I wasn't taking notes at the right time. "Your readers will want to know this." There was so much more he wanted to say about HMR -- that there were no fixed job descriptions or reporting hierarchies, that it's a company with a mission to improve the health of millions of Americans, that if he'd gone to business school he'd probably have hired a CFO and gone bust like the competition, that. . . .
But in the end it's the numbers that make it all possible. It's the model that makes it all work.
The irony, Stifler would say, is that being a numbers guy in the manner he's devised has enabled him to be a big-picture guy, too. Paying attention to the right numbers helped him figure out how his business should function. In detail. But he doesn't need to know details anymore. By watching just a few numbers, he can see they're working.
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BY THE NUMBERS
* Productivity: Because Stifler's main expense is people, every month he looks at productivity -- revenues divided by number of employees. The number he gets doesn't tell him much, but it is quick and easy, and if it starts going down he knows he's got a problem somewhere. 'With this one number, I don't have to look at any other,' Stifler says.
* The Check: HMR makes money on product and loses money on service, so Stifler has to write a monthly check from the product side's checking account to cover the shortfall in the separate account for service. His model -- and experience -- tell him what that check should be as a percentage of company revenues. If it deviates, he knows he has a problem.
* Expense Ratios: Patient enrollment is Stifler's key. Every patient should generate a known stream of revenues and expenses, and HMR's model relates the line items that result. If the productivity figure declines or the size of the check Stifler has to write gets out of proportion, an expense has gotten out of line with the model. To find it, Stiffler looks at expenses as a percentage of revenue.
