Midwest Eye Care

An Interview with Jay Slagle, CEO of Midwest Eye Care
By Vyoma Acharya and Piyush Gupta, Creighton University MBA students

Midwest Eye care was founded in 1951 by Dr. Jack Filkins, and was the first Nebraska Ophthalmology practice to perform intraocular lens implant surgery; perform corneal transplant surgery; research and use the excimer laser now utilized in LASIK surgery; and offer direct care contact lens services.

Midwest Eye Care has eleven ophthalmologists and three optometrists on staff at three metropolitan locations, and it is now the largest independent vision care provider group in Nebraska and western Iowa. The company is headed by Managing Shareholder Michael Halsted, MD, and CEO Jay Slagle, who initially joined the company as a patient accounts manager.

Midwest Eye care also has a long tradition of excellence and community service. In May 2004, Midwest Eye Care became the first Nebraska health care institution to receive a coveted Integrity Award for Service Excellence from the Better Business Bureau, due in part to their commitment to business ethics and community service. In addition, Dr. Peter Whitted was honored in 2003 as a “Heartland Hero” by the Nebraska Chapter of the American Red Cross for his community service, and Midwest Eye Care received a Corporate Citizen Award in 2003 from Prevent Blindness Nebraska for support in fighting vision problems.

In 2008, Midwest Eye care was recognized by the Better Business Bureau with their second Integrity Award for Service Excellence.

On behalf of the Omaha Business Ethics Alliance, we interviewed CEO Mr. Jay Slagle on how ethics plays a role at Midwest Eye Care. Below is an excerpt from our interview which took place at the company’s main office.

Can you please describe your career path at Midwest Eye Care and share your focus on ethics?

I worked in public accounting for five years, and then joined Midwest Eye Care as the patient accounts manager. I was promoted to CEO/ Administrator ten months later when my predecessor resigned. I continued to manage the patient accounts department for four more years before handing that

off. During periodic manager transitions, I have also directly managed the staff and operations in our surgery center and optical departments, and I am currently responsible for our Hearing

Center.

I've also covered other smaller departments during transitions and medical leaves. Being involved in the details of all those operations has been helpful as I work with the current departmental managers; I generally know the issues that are facing them, and hopefully have guidance to givethem. The only major department I haven't managed is the clinical department, but I have observed dozens of doctor clinics over the years as part of our quality program, so I have a good feel for what our doctors and nurses face. If you stick around long enough, you usually figure things out.

We have satellite supervisors for our other two locations. We meet as a management team each week, and they report to senior managers who provide counsel on issues. We rely on the satellite supervisors and doctors at those locations to raise an issue, and that's generally been effective. Periodically we'll hear a patient complaint, but most issues come from our employees. We try to make sure everyone knows what's right and wrong, so we just don't have to address that many ethical issues. I think the most atrisk departments for ethical issues would be our hearing and optical departments, since retail sales and sales commissions are involved. However, our satisfaction guaranteed policies are so strong in those areas that high-pressure or deceptive sales would quickly come back in the form of returns and refunds.

Congratulations on winning the Better Business Bureau 2008 Integrity Award! Could you tell us something about your nomination for this award and your reaction on winning?

We first won it in 2004. I first heard about the awards from a flyer the Better Business Bureau had sent to all of its members. I thought that it was a neat thing and I wondered how many companies do that. So I dug into it and applied. We never thought we would win it but that we would definitely be in the running. We did not expect to win in 2008 but we had changed quite a bit in the last four years, done some remodeling, so we decided to reapply and go through the effort. I was really pleased to win it.

So this is the second time that your company has won. How was your reaction on winning this time?

I was a lot happier this time! The first time in 2004, they didn’t tell companies before the awards lunch that they had won, so we were just told that we had been short-listed for the semifinals but wouldn’t know the result until we got there. So when we won, we had only 8 people there, not even a full table. We didn’t send many people there in 2004 because we didn’t really know what the awards were about. So we got there, and we found out we won and it was a nice surprise. It was the first Integrity Award luncheon we had attended.

There were about 800 people there and we thought it was kind of cool but we didn’t really understand what an honor it was. After that, I joined the Integrity Award planning committee and I got to work behind the scenes and know a little more about it. So, this year we applied, and they now tell you months in advance if you are a winner. I was so excited when Margo Riekes called me; I immediately sent out an e-mail to the entire company. This is the best award you can win in Omaha and we were very excited about it. We thought we should share this occasion, so we mailed letters to about 150 of our vendors and business partners. We asked them to come along for lunch, because we wanted to share the day with them. So we ended up with 100 employees and doctors, and another 70 business partners. The most any winner had ever brought before was about 30! So we had a big group and it was really cool.

So do you attribute this winning to the work culture at Midwest Eye Care or to your leadership in the company? Or is it based on your selection of good employees?

I think it is mostly the leadership of the physicians. When I came here in 1994, one of the first jobs I was given was to help coordinate “Mission Cataract.” It was the first time we had done Mission Cataract. It is one day in May, when practices from across the country give free cataract surgery. We started by performing 5 free surgeries and last year it was our 14th year. For the last 5 years we have been doing at least 20 surgeries a day.

We provide free cataract surgery to people who fall through the net, the people who aren’t under Medicare or Medicaid. These are people who are stuck in the middle and maybe can’t keep a job. With the economy as it is now, more and more people become uninsured and we become more involved with these types of things. More of our doctors are getting involved and our new doctors are really excited to do this. Two doctors were involved in 1995; I think we had eight doctors help with Mission Cataract in2008. It is a part of our culture. The doctors say that if they do things, they want to do it right and if they ever screw up they admit it. Everyone has bought into that, our managers have bought into that.

Our managers have been here for quite a long time. I think that helps to continue the culture. I have been here for 14 years, our call center manager has been here for 25 years, the clinical manager has been here for 12 years, the patient accounts and I T managers for 11 years, the surgery center manager for 15 years, and the optical manager for 10 years. Despite our tenure, we have dozens of employee who have been here longer than us.

So the top people in the company have been here for a long time and that helps with the continuity of the different programs?

Yes, because you don’t have to re teach culture and everybody knows that this is what we really do. If there is ever an ethical question, you don’t even really need to ask anyone, because they know what the right answer is!

So the free surgery, is it mostly done in Omaha?

We promote it regionally. We have a list of optometrists in the surrounding area and we send them letters, since they are the kind of people who would see patients who need cataract surgeries and don’t have money. We also notify local newspapers and we notify a few hundred non-profit organizations and churches in Omaha. We generally pull patients from around 100 miles away from Omaha, and we do the surgeries in Omaha at our surgery center.

Do you also provide free continued care after the surgery?

There is usually a 90-day post operative period during which we look after the patient for any surgery related issues for free. Then we send the patient to referring optometrists who provide further care for free.

Do you reimburse the optometrists?

No, we don’t. They usually want to take care of their own patients for free. So it is not a life time commitment. We provide them free surgery and then they are back on their own.

If there is a legal problem and the patient you gave free surgery to, comes back and sued you, would that be covered?

I have heard of this happening in other cities, but it’s never been an issue with us for Mission Cataract. But yes, it is possible. However, usually the patients come back and say, “Hey , I have another problem, could you take care of that one too?”

Or they would refer other people to you?

We have a lot of people calling us up in the fall and asking about Mission Cataract. We have to tell them it’s only in May. We often call them back in April and tell them it’s time to schedule their evaluation. Then they tell us, “Oh, I went and paid for it somewhere else.” So, they probably didn’t qualify for free surgery in the first place. The passage of time filters some people out.

Do you have a formal ethics training program in your company for new hires?

No, we don’t have an ethics program but we do have an ethics policy which is just passed down. Before this year, we didn’t have a written ethics policy but everyone kind of knew what to do. A lot of things that we have done, we did because it was the right thing to do.

An example of this is the issue with pharmaceutical companies. Pharmaceuticals are great but they do so much more direct marketing to patients than ten years ago. The industry also focuses on doctors, and they try to influence doctors to write prescriptions for their drugs and not their competitor’s drugs. Researchers have found that a free pen from a drug company is as effective as a $5,000 consulting contract. So about five years we stepped back and stopped accepting meals from drug companies, because that is how they get into doctor offices. And this year we said ‘no’ to anything free from drug companies, including pens and notepads, but we will take the free samples. We give the samples to the patients. So a lot of these reps come to your clinic, and try to talk to you.

Do you still encourage them?

We still listen to them and hear what they have to say. We sign a form for the samples we receive. We are never rude to them. We used to have drug reps coming in and saying that “You’re not prescribing my drops as much as you used to.” The doctors used to be incredulous: “How do you know that?” There is now a website the American Medical Association has publicized where doctors can enroll so that drug companies can’t see what doctors prescribe. Most the doctors have signed up for the program.

Do you mean to say there is some recording mechanism that can trace what a doctor is prescribing?

Yes, when you give your prescription to the pharmacy, the pharmacist uploads the data to some kind of a clearing house. The drug companies pay the clearing house for the data to find out which doctor prescribed which drugs each month.

Well, isn’t some of the patient information confidential?

They take off the patient information so they only release the doctor’s name and the prescribing information.

So tell us, when you got a written ethics policy in place, was it a very expensive undertaking?

Not at all. What we did was, over about a week’s period we just looked for different ethics policies on the Internet to see what was out there. Most of the things we knew and didn’t need help with, but you always think you are going to forget something. So we did an internet search, found some examples and wrote an ethics policy.

I don’t think that there is any expense involved in being ethical. Maybe in the short term you end up giving up something but in the long run you get to keep your patients. We have always focused on clinical quality and have been conservative by doing what is right.

We were wondering if you could tell us more about your company, Midwest Eye Care. How long back was it started and how long have they been in Omaha?

We were started by Dr. Jack Filkins in 1951. We have been around for 57 years. We have always been independent, never owned by anyone but our doctors. We weren’t very large until the mid-80s when we jumped up to 5 or 6 doctors. Since then we have expanded quite a bit.

Usually the majority of doctors practice by themselves or with a partner, but some like to practice in groups and there are some doctors who are owned by hospitals. A lot of times it is difficult to get doctors to work together unless they are coerced to do so. So we try to pick out doctors who really want to work in a group. They do understand that in group practice they have to lose on some issues and win on some issues. So the doctors have bought into the idea of working in a group and they do that really well.

We have been involved in many academic programs with the Med Center. One of our doctors is the co-director of the Resident Fellowship Program there. We also started our own fellowship in Group Practice Management. We take someone from the Master’s Program in Healthcare Administration and they spend a year training how to be a manager. We send them off to work somewhere else.

You have expanded a lot and now you have three locations. Are most of the doctors partners in the company?

Yes, 11 of our 14 are.

Do you have some kind of a screening program for your doctors before you hire them?

Well the last three that we hired, we knew beforehand. One was the daughter of a shareholder, one was a fellow so we got to see him for a year, and the last one, she was with us three years ago before moving overseas with her husband. When she came back, we rehired her. Our last ‘stranger’ hire was an optometrist. We had two candidates who were both equally bright but had different personalities. We had one who was quiet and another who was extremely outgoing, but they were both equally intelligent. We had 8 shareholders at the time, and we had them spend a lot of time with the two candidates before they made a hiring decision. We ended up with an outstanding doctor.

Earlier you mentioned that we must always do, “what is right.” In the medical field a lot of times doctors have to manage the interests of the patient and also manage the insurance companies. Do you see any gray area here?

I have never seen an insurance company refusing any surgery for a patient because it is less profitable for them. The only problem I have had with insurance companies is that a couple of them just don’t pay their claims as quickly as they should. We take care of their patients and then we don’t get paid for what we do. I think if there is an inherent conflict, it might be when a patient comes in without a penny to his name and needs emergency surgery, for example, a detached retina, and the doctor is going to be working until midnight without getting paid and the patient is going to get free surgery. But that is what you do because it is the right thing to do.

Well, you know, sometimes the insurance company might say, we are not going to pay for this surgery and as a doctor you really think the patient should get the surgery, how would you approach that?

We usually appeal their decision; it is usually a matter of preauthorization. I can’t tell you the last time that a surgery that we thought was necessary got denied. Sometimes it gets denied because the insurance company didn’t understand it, but when this happens, we would just have our surgeon call their medical director and talk doctor to doctor. He would say, “this is why this patient needs this surgery, ” and then the medical director approves it. I think there was this time in the mid 90s when RK (Radial Keratotomy) was the big thing and people were trying to argue that RK was absolutely necessary for this patient. We never did that. We have never been a big player in LASIK and RK, but there are some doctors who try to convince the patients that they need it.

So, the excimer laser is this new big thing. But you don’t really push it unless the patient really wants it? I have seen on T.V. , your competitors seem to push it a lot?

I have seen those advertisements. I’ve also seen deceptive advertisements about how doctors can help you with macular degeneration. I’ve taken a Healthcare Ethics class; it bothers me that an ad suggests that 100% of people with macular degeneration can be helped when only 10% of patients have the treatable form of macular degeneration.

But getting back to LASIK, we tell about 45% of all patients who come in that they are not good candidates for LASIK. If they are a bad candidate but still have the surgery, several years from now we might end up doing a corneal transplant, so we have a very conservative screening process. Our competitors have a rejection rate of about 10 – 25%. But that is why we don’t advertise much, because for every dollar we spend on advertising, 45 cents is wasted. If we advertise a lot, we are going to be pulling in a bunch of people who are not going to be good LASIK candidates.

The good part of not being a LASIK-centered practice is that we can weather downturns in economic cycles. For example, in 2001 after 9/11 the economy tanked and now it’s tanking again. When this happens, the number of people coming in for LASIK goes down, and we hear of big LASIK practices who have to lay off employees. We don’t have to lay off employees during these periods because we have only one employee who is dedicated to it, and we can always have her do some other stuff until things get better. I don’t know if that makes us ethical, but I think repeated lay-offs are questionable. There are larger companies who go through cycles where they hire 500 people and next year they lay off 500 people.

Could you tell us a little about yourself, your education, your first job and how your upbringing contributed to your values?

My dad owned a hardware store while I was growing up; it was called ‘Gambles’. We don’t have Gambles stores anymore but it used to be a Nebraska, Kansas kind of thing. So I started working for mydadwhenIwas10and I worked for him until I was 22, even through college. That was a neat business experience because I got to manage the store by myself some days. On Saturdays during college I used to manage the store in Nebraska City, and usually I was the only employee in the store. I went to Creighton for my undergrad and got an accounting degree. Then I moved to Houston and worked with Price Waterhouse (P W). I worked in accounting for 5 years. Right after the first Gulf War, I worked in Saudi Arabia for 6 months for Price Waterhouse, and then I came back and worked in Omaha for three years. When P W closed their office in Omaha, I stayed here. So I have had only two jobs since college. When hiring, I really look for people with a little longer tenure at one job because we want people to hang around, especially the managers. Our average employee tenure is about 7 and half years, which is quite good for a company our size.

Do you think there is a connection between your upbringing, working with your father, to the values you learned then and the way you tackle ethical issues now?

My mother is a very strong Catholic and I was raised a Catholic. I think being religious helps to a large degree. I also went to Creighton and we talked in business and theology classes how important ethics is. I have had the opportunity to see people who are unethical.

But at the end of the day, with my Catholic guilt, I don’t want to be kicking myself that I did something wrong. My parents were really good role models.

How important of a role does ethics play in your company? If your business was suffering would you be tempted to make an unethical decision?

If you ran your company ethically, you wouldn’t be doing foolish things. In fact, a couple of weeks ago, I sent out an e-mail. It was a reaction to discussion held during one of our weekly manager meetings. Our optical manager was being questioned by a few opticians. The opticians wondered if Midwest Eye Care was one of those companies that borrowed money to meet payroll.

Apparently there had been some stories in national news where companies had to borrow money to meet payroll, and it was becoming tougher to borrow money as the recession deepened. My e-mail to the employees discussed the current economic conditions, how the company was positioned, and how the company would react in an event of business difficulties.

I explained that the company does not borrow money to meet payroll, because the company has enough funds of its own. Furthermore, the e-mail explained that since Midwest Eye care was in the health care business, perhaps the company had some natural protection from recession when compared to, say, a computer chip maker. I assured the employees that if we did encounter difficulty, we would keep the employees well informed and provide advance notices when appropriate. During a recession, we think there are two things that people value: a reliable job and health insurance. Our goal is to continue to provide those to our employees.

I think it’s important to be honest with employees. Ethics play a big role at Midwest Eye care, even when it comes to employee evaluations. I came from a public accounting firm where we received constant evaluations.

They were often brutal, in the sense that the managers would tell you exactly how you performed. They would tell you the good and also discuss the areas where improvements could be made.

I implemented this straightforward evaluation system at Midwest Eye care because companies need to tell employees how they can improve. If you give shallow praise to an employee and then fire them later because they don’t perform well, that’s your fault. I believe that some employees are truly better than others, but it’s unethical to withhold information that could potentially make an employee better. Therefore, honesty in employee evaluations is really important at Midwest Eye care. I believe that employees will act honestly if employers are acting honestly.

Very generally, what do ethics mean to you?

It means doing the right thing. An outside observer should be able to look at it and tell if it’s right or wrong. Some of it may be perception but still it ought to be pretty clear. The hard part of managing isn’t making decision or managing employees but it’s communicating a clear and honest answer. It is important that at the end of the day I should be able to sleep well.

Can you give us an example when you had to make some tough ethical decision?

I’ve had several employees over the years who were either technically gifted but horrible to co-workers, or genuinely nice people who either didn’t work hard or weren’t capable of doing the work. I hate firing employees, but I also have an obligation to our practice owners and to the employees who do great work every day with little recognition.

Every situation is different, but eventually it comes down to a frank discussion with the employee. To this day, we have former employees who were just poisonous to our environment, but they don’t understand why we asked them to leave. We have the important job of taking care of patients, and if you’re an obstacle to that, we just can’t keep you here.

The big question, particularly with new supervisors dealing with a difficult employee, is whether you ignore the problem or address it head on. Clearly, these types of employees effect the culture and performance within the company, and often set a bad example for other team members. It’s almost always a difficult decision, but ultimately it’s the right decision for the company. That doesn’t make it easy.

Can you give us an example about when you had to make a tough medical related ethical decision?

We have had to terminate our relationship with patients. One of our patients was an older lady, perhaps 85 years old, who had advanced glaucoma. She had a 45 or 50 year old son (also a patient) who was a hulk of a man, perhaps 6’5’ and a huge guy. For some reason, the son had some anger issues and tried to intimidate and threaten one of our managers. We had to discharge the patient and gave her several options to see someone else locally. At the end of the day, it is our duty to protect our employees.

Another patient example occurred when the four-day Thanksgiving holiday was approaching and a patient didn’t show up for a scheduled laser treatment for glaucoma on the Monday before Thanksgiving. The patient needed the laser, and we kept calling the patient over Thanksgiving weekend. It turns out that the patient had a lot of family coming for Thanksgiving, and with all the cooking and preparation, she didn’t feel she had time to come in for the laser.

I finally reached her and explained to the patient that the surgery was very important to prevent her from losing vision.It took a few more phone calls, but the patient finally agreed to come in for the procedure on Saturday after a lot of persistence. I’m sure she was tired of the phone calls, but it was the right thing to do even though the patient didn’t understand the seriousness of the situation.

Does ethics play different roles in an accounting firm than a healthcare clinic? Do you have to be more ethical in healthcare since it involves peoples’ lives?

I think ethics in healthcare is just as important as ethics in accounting. Arthur Anderson ( A A) was a competitor of Price Waterhouse before AA went bankrupt. The main reason AA folded was because of 10 or fewer employees on the Enron engagement, and they brought down a very good international accounting firm with thousands of employees. Similarly, a fairly small number of people were responsible for destroying Enron. The bigger you get, the more responsible you have to be, particularly as an executive. Even in a medium sized company like Midwest Eye Care, one employee could really ruin things if they wanted to.

What are the biggest ethical challenges that are faced by the young business professionals today?

Midwest Eye hasn’t hired many young managers lately due to our low turnover, but it’s getting tougher to find employees who have a strong work ethic and sense of duty . They are out there, but it takes more time to find them. I think that some of the younger generation have the issue of entitlement where they feel like that they should be given everything on a platter. They don’t want to work hard and put in long hours. This isn’t necessarily wrong, it’s just different. For example, the doctors 20 years ago worked 60+ hours a week. Now the doctors coming out of medical school want more of a balance between work and family life.

Do you think that businesses in Omaha are more ethical?

I haven’t had enough experience outside Omaha to say. I was in Houston for two and a half years, and I came back to Omaha because of the people. In Houston the people were more flamboyant and things were more about appearance. As a whole, they were probably nice people, but it was difficult to know them well enough really to know if they were nice people. People in Omaha are generally nice and more humble and honest about everything. I really don’t know if any of them are more ethical but perhaps a little more forgiving.