Last Sunday evening, On April 9, 2017, David A. D. Dao, a 69-year-old Kentucky physician, was a passenger on United Express Flight No. 3411, scheduled to fly from Chicago, O’Hare International Airport to Louisville, Kentucky. The full flight was delayed as gate agents tried to convince 4 passengers to give up their seats after completing their boarding process in exchange for United vouchers to accommodate 4 crew members. There were three takers. After raising the ante to $800, and still with no takers, the gate agent, following SOP informed Dr. Dao, who had already boarded, that he had been “randomly” selected by the system to be removed from the aircraft. He refused. The rest is now U tube lore: airport security dragged him from the plane, causing a concussion, cuts, a broken nose and the loss of two teeth.
United’s CEO Oscar Munoz apologized on behalf of the company promising to change its operating policies and procedures to avoid future incidents, but only after making two statements characterizing the incident as a “system failure” and Dr. Dao as “disruptive and belligerent.” By Wednesday, the Dao family had hired lawyers and filed a petition ordering documents about the incident to be secured (Petitioner’s Emergency Bill Of Discovery In The Circuit Court Of Cook County, Illinois County Department, Chancery Division) pending litigation. And the story has gone viral wiping out $800 million of the airline’s value to its shareholders.
This week, I spent several hours studying performance data for the U.S, airlines (US Department of Transportation’s Air Travel Consumer Report, March 2017). I reviewed United’s operating procedures (Contract of Carriage Document (Updated February 17, 2017) with particular attention to Rules 21, 24 and 25 that address delays, involuntary deplaning and other incidents. I read Wall Street analysts’ assessments of the incident and media coverage through the week. What I found surprised me.
It turns out that United’s frontline personnel mishandled what could have been a manageable issue. The flight was not oversold as first reported and the gate agents could have offered more than the $800 they announced to recruit their volunteers. Dr. Dao’s selection was far from “random”: gate agents are instructed to consider what a passenger paid for their ticket, their frequent flier status and their fare class in choosing who they’ll eject. Dr. Dao boarded the flight as a paying customer and was involuntarily removed but in oversold situations, UA personnel are instructed to secure volunteers prior to boarding. And it’s ironic that nowhere in Rule 24 is a United agent instructed to make room for airline employees by bumping paying passengers. Nowhere! The fact is this incident is not atypical. It sparked outrage among consumers but surprised few road warriors who frequent commercial air travel.
Among the 12 largest airlines, the data shows they ‘get it right’ (flights that leave on time, arrive safely on time and there are no deplaning incidents or mishaps with baggage) 76% of the time. That means one in four flights will have a disappointing result of some sort.
Some incidents, like delays, involuntary deplaning of passengers, mechanical issues, crew scheduling, lost baggage et al are due to an airline’s operational performance (See Fact File below). And many are a direct result of aviation system issues– how airports accommodate flights, work rules, compliance with regulations, air traffic control, and many more. Ironically, the Big Four—Delta, American, United and Southwest—actually do better than the regionals on most measures and United’s performance had actually improved in recent months. But passengers who are stranded in airports, delayed, inconvenienced, put on hold for hours when trying to reach a customer service representative or “selected” for ejection from a flight blame the airline, whether their fault alone or a complication of how the aviation system operates. It’s odd, for instance, that per policy, an airline is not obligated the airline to operate a flight you pay for so long as you’re accommodated by the same airline within 7 days. Or how delays attributable to bad weather relieve the carriers of virtually all responsibility.
There is uncanny comparability between the aviation and healthcare industries. Both are big industries whose biggest players operate globally. Both are consolidating. Both are highly regulated. Both are high profile industries where mistakes get media attention. Both cater to “consumers” who are dubious about their performance. Both depend on hourly personnel for optimal user experiences and problem resolution (gate agents, customer service reps and ticket counter representatives for the airlines and nurses, technicians, member services and call center personnel in our hospitals, clinics and insurance plans). Both manage around high priced talent who are sometimes testy: pilots and physicians. Both depend on technologies and advanced analytics. And both play vital roles in our economy.
It seems to me healthcare can learn from the United 3411 incident:
Our mistakes can’t be hidden. They must be expected and managed. Dr. Dao’s treatment is presumably an isolated event but for frequent fliers, it’s symptomatic of a larger, systemic disregard for passengers common to all carriers. Personal experiences as travelers and ubiquitous social media expose our shortcomings. And media coverage amplifies the attention given our most egregious miscues….like insurer denial of coverage for life saving treatments, price gauging by drug manufacturers, unnecessary tests and procedures ordered by physicians and safety lapses in our hospitals.
Media attention to negative incidents is intense and sometimes misleading. Simply put, there’s always more to a story than what’s reported. Deft handling of bad news requires organizations to be forthcoming about their policies and procedures, especially when technically in the right but with an adverse result. There was nothing illegal about what United personnel did though a lawsuit will certainly point out that O’Hare’s Airport Security carried out Dr. Dao’s ejection in an inhumane manner. But the fact is United’s performance is essentially no better or worse than its competition: it’s not an outlier.
An organization’s reputation is dependent on how its frontline personnel perform, especially in times of stress. The operating policies and procedures, and the organization’s underlying culture, are exposed in extreme circumstances. In most organizations, it’s our frontline teams that define user experiences. They see gaps between performance and perception. They know the VIPs and leaders who are sincere in servant leadership and those who are more self-absorbed. They understand how they’re evaluated and rewarded, and the expectations of their superiors. They know how much latitude they have to solve problems and the repercussions if they fail. Had the frontline personnel managed the Dr. Dao incident differently, members of Congress would not be considering punitive action and shares of United Continental Holdings would be worth 4% more.
Boards of directors are ultimately accountable for how policies and procedures are implemented. I have served on four publicly traded company boards and several not for profits. It’s customary that Directors steer clear of day to day operations to focus on strategy and building shareholder value. But United 3411 exposed an operational flaw that hurt the entire organization. A board can ill afford to be ignorant of how operating policies and procedures are carried out in an organization: feigning ignorance is no defense. The travails of Uber, Wells Fargo are widely reported alongside healthcare names like Mylan, Theranos, Valeant, Turing and others. They involve more than what the executives of these companies authorized and their frontline teams know the issues well. Boards in healthcare organizations must know how policies and procedures are implemented, incentives designed and leaders evaluated up and down their organization. And they must be wary of scenarios that can lead to incidents like United 3411.
I spend several hours weekly in airports and on planes. It’s not fun. After a 7 hour delay last Monday and a cancellation Wednesday, I found myself imagining there’ll be a disruptor white knight who’ll shake up the status quo the way Uber, Tesla and Amazon have institutionalized their alternatives.
The traveling public has grown to expect long lines, delays and frontline more concerned about accommodating their co-workers than paying customers. When it’s otherwise, its recognized. When it crosses a line as Dr. Dao experienced, it sparks resentment and outrage.
The boards and leaders in every hospital, health plan, drug and device maker must heed the lessons from United 3411 and its continuing coverage. Our industry does not enjoy the public trust such that an incident like this will be dismissed as a rarity. Polls show the public thinks our system is expensive and complicated. They trust nurses more than doctors, hospitals more than insurers, online report cards over ads and anyone other than a member of Congress.
They are accustomed to impersonal treatment and expect mediocre service. They are divided over the health system’s future, ignorant about laws pertaining thereto, unaware of its costs and unsure how to compare its quality. And they’re searching for alternatives.
The climate in our politics is toxic. The mood among air travelers is reluctant acceptance since options are limited. The climate in healthcare, comparatively, might be more positive. But the reaction to United 3411 is not too remote from the simmering mood surrounding our health system.
PS: Behind the scenes while Congress is on its two-week recess, negotiations between the Freedom Caucus and GOP House leaders have continued toward a goal of re-introducing the American Health Care Act with more latitude given states and tighter spending controls. Also, conservative members have said they’ll introduce legislation to cap medical liability awards (17 states have no limits) and a plan to address opioid (Fentanyl) addiction got regulator attention last week: it is estimated that 26.4-36 million people abuse opioids worldwide including 2.1 million in the United States. Stay alert!!
Fact File: United Airlines data (Air Travel Consumer Report March 2017, US Department of Transportation)
Chronically delayed flights (late 70% of the time): American & Delta have 0% of their flights that are chronically delayed vs. United with.03 and Southwest with .05.
Cancellations per 1000 flights: The Big 3—American, Delta and United outperform theregionals on cancellations: 1.8% mean for the 3 vs. 1.97% for all 12 and 2.1% for Southwest.
Delays: In 1/17, 450017 flights, 75.99% were on time (78.36), 1.97% were cancelled (.55), .33 were diverted (.27), air carrier delays caused5.90% (6.41), extreme weather was .72 (.64), national aviation system glitches caused 7.19% (8.03), security delay .04 (.01), late arriving aircraft 7.96% (5.74) United performance.
Mishandled baggage: 3.4 complaints/1000 enplanements (range 1.85-6.32), UA 3.31.
Passengers denied boarding in 4Q16: .54 (106,723 of 164,615,313 enplanements) for range of .07 to 1.28—UA .40 6th below DL but ahead of SW & AA.
Overall complaints per 100K enplanements: range: .46-7.87 UA #9 2.26.
The best times to fly for on-time arrivals and departures are in the morning: the later in the day one travels, the higher the likelihood there will be problems.
Arrivals On time: In the last 12 months, among the 12 major carriers, the range is between 75 and 91% of all flights with an average of 81%, Hawaiian, Delta and Alaska are best; United is 5th overall.
Problem airports: Newark and San Diego airports to avoid due to delays and Charlotte the best national airport to use for on-time. (Note: Louisville on time arrivals is .80).
Financial performance: UA Revenue from core business in 2016: passenger $$$ down 4.1% to31.4B while “other” up 2% to 36.6% net -3.5%.