In just two years, Minnesota-based Fairview Health Services turned a $315 million annual loss into a nearly $600 million turnaround.
Fairview lost money every year from 2019 to 2023, with the 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 the American Hospital Association‘s Leadership Summit in Denver, Fairview CEO James Hereford explained how his organization pulled off the turnaround.
— Pairing operational discipline with mission: Healthcare naturally attracts people who want to do meaningful work, but that alone doesn’t fix a budget, Hereford noted. In his view, health systems have to combine their mission with real financial discipline. An example of what this has looked like at Fairview is designating one person to be accountable for overall labor spend, and then digging into specifics — like which units were leaning hardest on agency nurses and why — so leadership could respond with targeted fixes.
—Redesigning roles and the workforce pipeline: Hereford said Fairview had to rethink how it attracts and develops talent. The health system is now reaching further upstream — including talking to students as early as middle school about careers in healthcare — rather than competing for the same shrinking pool of experienced hires. Fairview also remodeled its clinical roles for the future, since healthcare can often offer a career ladder where someone can start as a nurse’s aide and work their way up to becoming an RN.
—Driving process improvements on the front line: Fairview borrowed an idea from the University of Hawaii, asking nurses and doctors to flag the tools and workflow headaches that made their jobs harder. The health system collected thousands of submissions, and it later rolled out changes addressing a couple hundred of those suggestions. Most of these changes were fixes to how clinicians used Epic, Hereford noted.
—Finding and fixing bottlenecks on the ground: Drawing on his background in operations, Hereford said Fairview focused on identifying specific pain points — like patient throughput in the operating room — and then going directly into those units to observe how work actually got done. He pointed out that approach helped drive down length of stay across Fairview’s 13 hospitals.
Photo: BlackSalmon, Getty Images
