Sunday, May 11, 2008

If Hazelden is healthy, why have almost all execs left?

A hard-charging outsider brought corporate sensibilities and a clash of cultures to the addiction center.

CENTER CITY, MINN. - Hazelden Foundation, the treatment mecca that made Minnesota a top destination for beating addiction, is in many ways enjoying some of its best years as a business.

The number of patients is growing. Donations are up. There's a new graduate school. A new women's center overlooks a lake on the bucolic campus.

So why, in just over a year, have nearly all of its top executives resigned?

Last month President and Chief Executive Ellen Breyer became the most recent of six executives to go, leaving a leadership vacuum just as a slew of initiatives launch.

The answer seems to rest in a clash of cultures -- between an iconic Minnesota institution steeped in tradition and a hard-charging manager who tried to haul it into the 21st century corporate world.

Admirers describe Breyer as a visionary who modernized the 59-year-old nonprofit institution, forging contracts with insurers and revamping its publishing business. Detractors bemoan a focus on money as a departure from Hazelden's mission of treating addicts, insured or not.

"Ellen was recognized for taking on an organization that I'm not sure wanted to be managed," said Ron Hunsicker, president of the National Association of Addiction Treatment Providers (NAATP). He credits Breyer with improving Hazelden's finances.

"The question is: Is it a happy organization? That's a delicate balance," he added.

Breyer was hired five years ago to reverse Hazelden's slide in an increasingly competitive national treatment market. Despite rosy financials, it hasn't regained its former stature. The choice of the next chief may determine whether Hazelden does that, or becomes just another little rehab on the prairie.

Glory days

Thirty years ago, Hazelden was the place a rock star like Eric Clapton would fly to from London for what was simply the best chance in the world to get sober.

Still highly regarded, it is no longer the go-to place it was in the 1970s and 1980s. Back then, as William Cope Moyers wrote in his 2006 memoir "Broken," to be treated at Hazelden was to be "part of a community of strangers who knew intimately why each of us was there, and so we all felt as one."

It started in 1949 in a farmhouse where men followed a recovery program based on the Twelve Steps of Alcoholics Anonymous. Teams of psychologists, chaplains and clinicians developed an approach that was copied worldwide.

But by the time Jerry Spicer became chief executive in 1992, managed-care companies had decided they didn't like what had become known as the Minnesota Model, with its costly, long-term inpatient approach. They preferred cheaper short stays and outpatient care. Hazelden felt the cost pressure. Hundreds of other centers closed or downsized.

An outsider moves in

A decade later, Spicer's successor, health care executive Nick Hilger, lasted one year. In 2002, Breyer was plucked from Hazelden's board and made president and chief executive.

She had been vice president for marketing at Ryan Companies, a commercial real estate developer. Breyer brought an outsider's corporate sensibilities to the insular treatment field.

Hazelden inked a contract with Blue Cross and Blue Shield of Minnesota, which now brings in about 30 percent of Hazelden's patient revenue.

That Blue Cross contract opened the floodgates to insured patients but squeezed out those at the high and low end. Therapists and alums used to referring patients couldn't always get their self-paying patients in the door. At the opposite end, charity care fell.

Still, it was hard to argue with the numbers: In 2007, Hazelden had operating revenues of $109.3 million and a record 10,754 patients. Donors gave a record $12 million.

Despite Hazelden's traditional devotion to abstinence-based treatment, Breyer approved use of new pharmaceuticals to treat addiction.

She won some fans. "People generally thought highly of Ellen," said Jill Wiedemann-West, Hazelden's senior vice president and chief operating officer of clinical and recovery services. "She brought a vision."

But to others, she represented a break from the Hazelden of old, where being in recovery was a credential as good as any fancy academic degree.

"The addiction field has been known for its warmth, its compassion, its affirmation," said Hunsicker. "Ellen brought with her a bit of an aloofness."

The treatment community felt the changes. "Hazelden used to be looked at as the mother ship, the mecca," said Dan Cain, president of the Twin Cities treatment agency RS Eden. "That level of awe, of deference, has diminished significantly."

Breyer sees Hazelden's role differently: "There's the recovery movement, and there's the AA movement. Then there are organizations, Hazelden being one of them, trying to provide services to people in these movements. We are not exactly the same. ... Sometimes people think we should match up."

The exodus begins

In 2006, Breyer brought in the Hay Group, New York consultants who grouped Hazelden's activities into three "strategic" businesses: treatment, publishing and the graduate school. Fundraising was a fourth important area.

"Trying to get your hands around that organization was like trying to sort stuff out of cotton candy," Hunsicker said. "Ellen, for good, better or worse, rolled up her sleeves and said I'm going to build some accountability."

That year, the National Association of Addiction Treatment Providers named Breyer Administrator of the Year.

By the next year, Hazelden executives began leaving.

General counsel Ivy Bernhardson became a Hennepin County judge. Carol Falkowski, director of research communications, is now director of chemical health at the Minnesota Department of Human Services. Both declined to be interviewed.

Chief Medical Officer Dr. Marvin Seppala left to head an in-home treatment program. Vying to return as Hazelden's chief executive, he declined to talk.

Mike Ranum, chief financial officer and chief administrative officer, joined an architectural firm in St. Paul. He did not return calls for comment. Nor did Tom Galligan, former market development chief.

All left, Breyer said, because of other opportunities. The departures "had very little, if anything, to do with me," she said.

Moyers, working on public policy, had become Hazelden's most recognizable public face. He also tried to leave last year but stayed after Hazelden funded a Center for Public Advocacy and put him in charge.

Moyers said he viewed the changes Breyer made as "necessary, challenging and inevitable" but added: "I knew it was going to be hard to get resources for things other than our bottom line."

The chairman of Hazelden's board of trustees, Norbert Conzemius, acknowledged that there was friction but said "every CEO that's trying to get a job done and manage change is going to meet resistance."

The last straw

Early this year, Breyer announced she was moving Hazelden's headquarters from near Center City to downtown Minneapolis. She wanted to raise Hazelden's Twin Cities profile.

Some employees and board members felt that location was all wrong. "There's nothing about it that reflects the spirit of Hazelden. It's entirely corporate," said a senior executive, who asked to remain anonymous. That move, the executive said, was the final straw.

On Feb. 1, Breyer told the Minneapolis St. Paul Business Journal her office would be at US Bancorp Center on the Nicollet Mall.

On Feb. 9, she suddenly backed out of a NAATP board meeting in Phoenix, explaining she had to attend a special Hazelden board meeting. Breyer said she resigned at that meeting because she had exceeded a self-imposed tenure of five years.

She leaves an organization scrambling to carry out initiatives she launched, including modernization of the Center City campus and a commitment for a $10 million expansion in Oregon.

Hazelden has begun rebuilding its leadership, although three positions -- chief executive, chief medical officer and chief financial officer -- remain open.

The next chief, said Hunsicker, needs to be "someone in recovery, someone well-known in this field. They can't bring in another outsider."
source: Star Tribune

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