CEO says formula for success is passion for work

The advent of managed care networks and health maintenance
organizations (HMOs) have brought affordable health coverage
to a wide range of consumers, but such companies have been
criticized for cutting costs by limiting treatment options
and patient choice. Amid the changing industry landscape,
corporate restructuring and expansion became necessary,
said Mark Wallace, president and chief executive officer
of Texas Children’s, who spoke at the Jesse H. Jones
Graduate School of Management in March.

With the charge to expand the scope of services offered
to its patients, the hospital formed the Texas Children’s
Hospital Integrated Delivery System to ensure the hospital
would continue its commitment to pediatric patient care,
education and research.

Forging alliances with pediatric physicians whose private
practices were being pursued by managed care networks for
acquisition, Texas Children’s and Houston-area pediatricians
formed Texas Pediatric Health Associates, a network of 130
doctors operating in more than 40 practices throughout the
Houston area. The partnership proved beneficial both to
member pediatricians and the Texas Children’s, Wallace
says.

“It was a good strategy to solidify our relationship
with primary care physicians, who provide referrals for
the hospital,” he says. “On the other hand, Texas
Children’s took over back-office functions — billing,
collections, negotiating medical malpractice insurance,
hiring employees — for member physicians. That way,
[pediatricians] have more time to do what they do best:
provide the best health care possible for their young patients.”

To provide families living in outlying areas of Houston
access to network pediatricians, Texas Children’s established
health centers in Cy-Fair, Sugar Land, Clear Lake and West
Houston locations. Not only did the centers become effective
vehicles for delivering quality pediatric primary care for
Houston children, they also made good business sense. “The
health centers have been instrumental in increasing the
market presence of Texas Children’s pediatricians in
the Houston area,” Wallace says.

And the hospital’s health care services and programs
extend beyond Houston. To develop and support pediatric
health care efforts around the globe, Texas Children’s
International was formed to provide health care education,
services and programs for families and children living outside
the United States. In the past year, more than 1,000 international
patients from more than 60 countries received health care
at Texas Children’s Hospital.

While maintaining its commitment to pediatric care, education,
and research, the leadership team at Texas Children’s
also has to ensure the system meets profit margins. This
is where effectiveness and strength of leadership play an
important role.

“We have set up three different levels of authority:
policy, human resources and finance. We make sure there
are appropriate checks and balances in all these areas,
as they all play an important part of how decisions are
made and how resources are allocated throughout the system,”
Wallace said.

Strong and effective leadership has helped the hospital
in maintaining the balance between “mission and margin,”
Wallace said. Forty percent of patients at Texas Children’s
are enrolled in Medicaid, and the hospital also treats numerous
uninsured children who are treated on a “charity care”
basis because their families cannot pay hospitalization
costs.

“We have to be cost-effective,” Wallace said.
“Our greatest challenge is to maximize our net revenues
so that we can continue to provide and even expand our services.”

More than 1 million children have received care at Texas
Children’s since it opened in 1954. Providing medical
care in more than 40 pediatric specialties and subspecialties,
the hospital takes pride in an outstanding medical staff
that consists of more than 1,580 board-certified, primary-care
physicians, pediatric subspecialists, pediatric surgical
subspecialists and dentists. In addition, Texas Children’s
has more than 6,000 nursing and support staff.

For Wallace the true measure of success is pursuing his
two passions: children’s health care and business.