Westhaven had become a heavy, and lonely, burden. And in the spring of 1983, Mary Lou Fox thought she had found someone who would share it. Never in the world could she have imagined the truth: her search was just beginning.
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Had Mary Lou Fox been a businessperson -- someone who identified a niche and set out to dominate it -- maybe she wouldn't have such difficulty maintaining an identity separate from her business. When she grew tired, she could have looked at the numbers, patted the two Mercedes in her garage, and quietly returned to civilian party giving. But she was too close to her business. "We're willing to operate on a lower margin than our competitors," she says, "because this business is a lot about the kind of person I am."
And one kind of person she is not is a failure. Which is why, in August of 1986, Fox decided she could not live with the pact she had signed three years earlier.
She was halfway through an earn-out plan that would have had her surrendering her remaining 30% of the company to its majority owner, a large local hospital. She had sold it, recalls Garth Tebay, an accountant and top adviser, "because she wanted more management strength and financial strength." What she got, mainly, seemed to consist of a lot of windy talk about how the hospital would transform $5-million Westhaven into a $57-million company within five years. In came experienced vice-presidents, flashy salespeople, and company cars. "They didn't know this was a customer-service business, and it wouldn't happen in the real world," says Fox.
What they didn't know nearly killed Westhaven. After hearing that it was hemorrhaging at the rate of $75,000 a month, Fox marched into a meeting and denounced her partners as "a bunch of jokers." With Tebay's help, she secured a $1.2-million loan and bought Westhaven back.
Rather than chase new customers -- an expensive proposition, given that it costs some $25,000 to bring a nursing home up to speed -- Fox spent the year returning Westhaven to its formerly darkened shade of ink. To regain the company's innovative luster, she snapped up the suggestions of her new adviser, Dennis Roth, whose Cleveland law firm specializes in health care. Roth had helped her negotiate Westhaven's discharge from the hospital. In 1987 he suggested she set up a special quality-assurance division, which would help nursing homes comply with new and complex federal regulations. Westhaven soared to more than $8 million in 1988, with profits of about 5%.
Fox had no trouble turning to outside consultants like Roth for advice, but her experience with the hospital had convinced her that the people who could best manage Westhaven worked inside the company. So in her second attempt to create management, she set out to build her own managers -- starting with herself. At a weeklong management seminar in Boca Raton, Fla., she says, she "learned the language of business."
She returned with a clear head and a concrete mission. To groom executives, Fox decided, she would anoint Westhaven's "star performers," who were mostly pharmacists. They already understood what the hospital higher-ups had never been able to grasp: the product Westhaven was selling consisted of service, not drugs. In accordance with the seminar's advice, these new disciples would implement departmental objectives that would support Westhaven's corporate goals. To make sure all the star performers were reading the same prescription, she whisked them away to a retreat on the banks of Lake Erie. "It was truly inspiring," recalls Suzanne Neuber, who served as vice-president of operations.
Inspiration soon drowned in perspiration. Almost immediately upon returning, recalls Fox, "they got into day-to-day fire fighting, and their backs broke." Within a couple of years, every one of the hopefuls had quit. "They couldn't delegate," she says. "They worked until they self-destructed."
Oddly enough, Fox's attachment to her customers may have been part of the problem. "If she asked you a question about a particular customer, then you had to give an answer," recalls Neuber. "Then she would ask you another question, which meant another answer. It went on like that. Others learned to blow her off until they got three yellow-stickys from her." Todd Herzog, one of the original foursome of "star performers" and now owner of a computer-consulting firm, recalls, "You get so much piled on you that you cannot survive. It pulls you to the bottom of the pond, and you can't release enough to get back to the top."
Distressed that the star performers "didn't make life any easier" for her, Fox decided the problem was lack of training. ("But I figured, Who trained me?" she says.) After thinking about it, she decided that "they might have been taught to delegate, but they weren't given the time to learn." The truth was, with sales exploding, Fox didn't have the time to teach.
Quite logically, then, her best chance to succeed at building managers was to find people who could catch on without any training. "I needed people with professional management skills," says Fox.
Aided by a headhunter, she began hiring experienced managers in earnest in late 1988. She had already brought aboard Tebay, a partner in a local accounting firm, as chief financial officer. He survived for a couple of years but finally succumbed to the same mysterious symptoms as his less experienced predecessors. His weight dropped to 160 from 194, and even Fox noticed "he looked like a gray ghost. People kept asking me whether he was sick." He wasn't. "I burned out," he says. "Mary Lou creates an exciting environment, and I didn't have the capability to say no to a problem."
