When Lucile Packard Children’s Hospital Stanford (Packard Children’s) opened a new facility in Palo Alto, California in late 2017, it proclaimed itself, with ample justification, the most “technologically advanced, family-friendly and environmentally sustainable” children’s hospital in the nation.
On the virtual tour of its new building, Packard Children’s declares, “Healing is an art. And a science. And, in this case, a place.” Packard Children’s was able to reach that “place” because its leaders, over the course of more than three decades, have practiced strategic leadership—a mode of nonprofit excellence that incorporates seven essential elements. Only by excelling at all seven of those elements, we have found, can a nonprofit earn the right to scale its impact. (We explore all of these elements, along with the principle of earning the right to scale, in our book, Engine of Impact.) Packard Children’s has a strong record of high performance in all elements of strategic leadership, and countless sick children, their families, and their communities are the fortunate beneficiaries of that achievement. The hospital also stands out for its record of scaling up effectively, and the new state-of-the-art building is a testament to its pursuit of growth with purpose.
We recently spoke with two of the leaders who are most responsible for making Packard Children’s what it is today: Susan Packard Orr, the esteemed philanthropist, who served on the board for many years, including chairing the Governance Task Force, and Christopher Dawes, who served as CEO for nearly two decades. They shared insights into their respective approaches to strategic leadership, which we have grouped according to several of the seven essential elements.
Recognize the need for insight and courage
When Lucile “Lu” Salter and David “Dave” Packard first met in the autumn of 1933, they were both Stanford University students and Lu was a volunteer at the Stanford Home for Convalescent Children on the Stanford campus, which took in kids with chronic illnesses like tuberculosis, many of whom came from poor homes in San Francisco; it was thought that the fresh air and sunshine of the Palo Alto countryside would hasten their cure. After Lu and Dave married, they eventually settled in Palo Alto. While Lu worked at Stanford to support the household, Dave and his friend Bill Hewlett worked in a now-famous garage on inventions that became the basis for founding Hewlett-Packard (HP). In the early days of HP, Lu served as secretary, accountant, and personnel manager. As HP grew into one of the world’s leading technology companies, she gradually stepped away from her office responsibilities and returned to her early passions: volunteerism and children.
By 1970, the Home for Convalescent Children had moved to new quarters on Sand Hill Road and become Children’s Hospital at Stanford – and Lu was on the board, becoming chair in 1983. Lu and Dave donated $40 million for a new building in 1986; shortly before Lu’s death in 1987, it was renamed Lucile Packard Children’s Hospital in honor of Lu’s unending generosity, service and, perhaps most importantly, vision. Lu had conceived of a hospital that would nurture its young patients’ body and soul, treating them not only as patients, but as kids, and giving the same stellar standard of care to every child, regardless of a family’s ability to pay – and that’s what Packard Children’s became.
“The children’s hospital was my mother’s vision,” said Susan Packard Orr, who has been on the board of her family foundation for 50 years and co-chaired Packard Children’s first two fundraising campaigns, which brought in more than $1 billion. “She wanted it to treat more than the disease; she wanted to treat the whole child and she wanted it to support the families as much as the children.”
Develop a sound strategy and base it on a clear mission
“Key to the success of Packard Children’s has been developing a strategy – a plan for achieving our mission – and then following it,” Orr said, adding that they established two key goals from the outset: to achieve financial sustainability and to obtain pre-eminence as a children’s hospital. The strategy for achieving pre-eminence, first formed in the early 1990s, was to develop “Centers of Excellence” that would provide comprehensive care in the key obstetric and pediatric areas of brain and behavior, cancer, heart, pregnancy and newborn, pulmonary and transplant. “Once we identified these goals, there was natural clarity about what we needed to do to achieve them and who we needed to recruit,” Orr explained. “We had the big vision but then we needed to follow a plan.”
Chris Dawes, the longtime president and CEO of Packard Children’s, notes that Orr made certain that strategy always remained tied to the mission. “When we discussed any strategy,” he explained, “Susan regularly reminded us, ‘Let us not forget the kids.’ So, I always feel that Susan absorbed her mother’s vision and had her own articulation.”
Fuel your impact with the right organization and talent
For his part, Dawes, said Orr, was the “driving force” behind implementation of the strategy. Dawes, who was COO at the time, worked to make the centers truly excellent by hiring the best faculty doctors. “To create a great hospital, we had to attract outstanding faculty, so we worked with Stanford to recruit over 100 in the next year and really set the enterprise moving forward,” he explained.
Maintain excellent board governance
To build and scale Packard Children’s, its leaders needed to build and sustain the necessary board processes, structure, and composition to ensure sound governance. Toward that end, they made a serious commitment to reviewing the performance of the hospital’s board. In 2004, for example, a special governance task force undertook such a review, with Orr as chair. The task force conducted interviews with forty-seven people, including current and former board members, members of the management team, top donors, and other stakeholders. During this review, Orr and her colleagues explored a host of critical topics: the roles and responsibilities of board members and of the board as a whole; the size, structure, and composition of the board; the board’s relationship with other boards; and the term structure for board members.
“The [Packard Children’s] board was already quite well functioning,” Orr said. “But we initiated a governance review in 2004 because we wanted to engage our board and its members more fully and ensure we were prepared for the increasing demands we were confident we would be facing over the next decade. … The board remains highly engaged at all levels, with very high satisfaction scores year after year on our annual board evaluation survey.”
Pursue smart scaling once the time is right
By 2011, said Dawes, “It became obvious that we needed to scale up.” The desire to grow was rooted first in Lucile’s original vision; as Dawes put it, “We wanted to reach more kids.” But there were other important reasons to scale. The constituency for children’s hospitals is, thankfully, much smaller than for regular hospitals since there are fewer children than adults, and most are healthy. The hospital sector, therefore, is prone to consolidation and hospitals must reach out to a broad population just to stay afloat and avoid being subsumed.
“When [children’s hospitals] become part of larger systems, invariably because the economics favor adult services, pediatric services become second class,” Dawes explained in an interview with Health Leaders Media. In addition, the outstanding faculty Packard Children’s had recruited was growing frustrated by the hospital’s capacity limits. “We only had seven operating rooms and a limited number of beds in our heart and transplant programs and some of the leaders were frustrated because they had more patients than we could accommodate,” said Dawes. “We did some analysis and determined we could attract more patients.”
Furthermore, a Breaking New Ground campaign to enlarge and improve the physical plant of the hospital had already begun in 2007 and had raised $262 million toward a new building, construction of which was underway. “It was expensive,” said Dawes, “so we needed to scale up to make sure we had enough activity to support it.” The new building ultimately opened in 2017, doubling the hospital’s size with an additional six operating suites and 149 patient beds for a total of 361 beds on the Palo Alto campus, and 397 within the Stanford Children’s Health network. (The hospital also has 3.5 acres of green space, in support of its commitment to “normalize,” as much as possible, the stay of every child).
To further scale its reach and impact, hospital leaders established Stanford Children’s Health, its primary care network, now with over 60 locations in Northern California, and developed 13 pediatric specialty services centers. In addition, Stanford Children’s Health has formed partnerships and affiliations with many hospitals in the Bay Area and beyond, offering specialized care for children close to home. These partnerships take different forms, including joint ventures in which all pediatric specialty care services are put into a limited liability corporation, with the host hospital and Packard Children’s owning half each. Said Orr, “Through the amazing network that Chris Dawes developed, Packard Children’s has been able to scale its impact in an outsized way, disproportionately greater than the size of its organization and physical plant.”
Originally published in Forbes