In just two years, based in Minnesota Fairview Health Services turned an annual loss of $315 million into a turnaround of nearly $600 million.
Fairview lost money every year from 2019 to 2023, with losses peaking at $315 million in 2022 amid pandemic-era labor costs and inflation. That streak ended in 2024, when the health system posted its first operating profit since 2018.
During a session this week at American Hospital AssociationAt the Denver Leadership Summit, Fairview CEO James Hereford shared how his organization achieved turnaround.
— Associate operational discipline and mission: Health care naturally attracts people who want to do meaningful work, but that’s not enough to set a budget for, Hereford noted. According to him, health systems must combine their mission with real financial discipline. An example of what this looks like at Fairview is designating one person responsible for overall workforce spending, then drilling down into the details – like which units rely on agency nurses the most and why – so management can respond with targeted solutions.
—The overhaul of roles and labor reserve: Hereford said Fairview needs to rethink how it attracts and develops talent. The health system is now going further upstream — including talking to students as early as middle school about careers in health care — rather than competing for the same experienced recruiting pool. Fairview has also reshaped its clinical roles for the future, as health care can often offer a career ladder where someone can start as a nurse’s aide and work their way up to becoming a registered nurse.
—Improve front-line processes: Fairview borrowed an idea from the University of Hawaii, asking nurses and doctors to report tools and workflow issues that were making their jobs more difficult. The health system collected thousands of submissions and then made changes responding to a few hundred of those suggestions. Most of these changes involved how clinicians used Epic, Hereford noted.
—Find and resolve bottlenecks in the field: Drawing on his experience in operations, Hereford said Fairview focused on identifying specific pain points — like patient throughput in the operating room — then went directly into those units to observe how the work was actually done. He noted that this approach has helped reduce length of stay at Fairview’s 13 hospitals.
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