Leadership in Difficult Times

Smart organizations see a difficult environment as an opportunity. It is a time to fine tune programs and services, sharpen policies and procedures, and to take a fresh look at the hospital’s strategic plan. A commonly used cliché says that when things get tough, the tough get going, and this applies to organizations as well. Now is the time to take a fresh look at the hospital, its environment, and the patients you serve. It is not a time to panic or retrench without thinking things through. It is particularly the right time to do the right things and to do them well, not cut corners or retrench in areas that will impact the success of your business. Let’s look at several things:


Your Strategic Plan

If you do not have a plan, this is an opportunity to develop one. A hospital without a strategic plan is truly like a ship without a rudder. There is very little ability to achieve success when you have not defined what that means for your institution. If you have a strategic plan, this is an opportunity to take a fresh look at it as the environment changes around you. Tough times are not an excuse to throw away your plan, it is a time to refine it and capitalize on the changes occurring in your area. For example, if your patients are experiencing reductions in insurance coverage, this is an opportunity to define and prepare for the added services they may need. Many hospitals are seeing reductions in elective procedures and an increase in emergency department visits. Are you adequately prepared for the potential reductions in revenue and the concomitant likely increase in costs and bad debts. Your strategic plan is the roadmap for your business. Develop it, keep it current and relevant, and implement it. In the final analysis, it is all about execution.

Manage Costs, but Grow the Business

It is a given that every business must manage its costs. There is a budget in place and a set of metrics to determine that appropriate cost levels are being achieved. Every organization must be able to define its costs so that is can determine what services make money for the organization and what services do not. Obviously, hospitals use more then a profitability analysis in determining the services that they provide to their patients, however, it is important to understand the services that may contribute to financial stability and those that detract from it.

It is my experience that true prosperity is driven by growth, rather than savings or cost reductions. It is very likely that a strategy focused only on costs will push the organization to reduce staff, skimp on services, and ultimately achieve the opposite results that were intended. I have never seen an organization implement layoffs without a long list of unintended consequences, including poor morale, service reductions, or even sabotage by unhappy staff.

A better strategy is to focus on growth, developing new business opportunities, either with new clients or new revenue producing services. It is always better in the long run to increase the size of the pie rather than to cut smaller slices for everyone.


People Matter

In service businesses like ours, nothing else matters more than the people we hire, the way we support them, and how we reward them. As I noted in the previous section, any action that harms our work force will always negatively impact our business success. Layoffs, salary reductions, and benefit changes may seem like smart actions but the impact of these decisions will harm the organization in ways that no one expects. The people left after a layoff are damaged in both visible and invisible ways, they are leery of taking risks, unable to take initiative to solve a patient’s problem, and are just looking behind them to see if they are next in line to lose their jobs.

The patient care we provide is entirely a people-driven service business. Anyone who thinks that a path to success does not go through a well trained, well-compensated, motivated work force is fooling themselves. It is all about servicing our customers, in fact, at Health Strategies & Solutions, we pride ourselves at over servicing our clients.


Focus on Your Core Business

I realize that this seems obvious, but as a former hospital administrator and current consultant, I am constantly amazed at hospitals that do not show a positive return from patient care services, but instead depend on non-operating revenues or investment income for their margin. We have lost track of the number of health care organizations that have told us they are cutting back due to reductions in their investment income. Yes – I do advocate added value services, but I view them as generating additional revenues, not as a replacement for margins that should come from core business activities. It is not surprising to me to see many hospitals that have been dependent on investment income for their profitability floundering in today’s marketplace. If you can’t make money from what you say you specialize in, you must determine the root causes and address them. Perhaps the hospital may no longer remain independent and must join up with a larger system for support. Maybe some services must be closed regardless of the community’s need for them. These are difficult decisions, but they must be addressed. Tough times only exacerbate the problems.


Technology Drives Success

Health care is obviously a technology-driven business, not only in the clinical areas, but also increasingly more important in administrative functions as well. This is evident in the installation of electronic medical records programs, scheduling systems, and billing systems. We are experiencing new product development occurring at an extraordinary pace and it can be overwhelming, especially to the small- and medium-sized organization. It is not the time to fall behind in providing the best available technological platform for your patients. Notwithstanding that the investment necessary to provide the latest technology is a challenging expense in the difficult environment we are experiencing today, this is a time to focus on providing the best services possible.


Lastly, Watch Your Competition

A good idea is a good idea. Who cares if a competitor thought of it first? A smart organization has a competitive intelligence system in place and knows what innovations are being developed in their industry. In a highly competitive business like health care, with a modest potential for differentiating your institution, you must focus on being current and even leading in your service mix. You can never stop looking for the even smallest possible improvement in your quest to be the best. Watch your competition and learn from them!


In Closing

Difficult times like today present us with a true opportunity. We can take a fresh look at our organization, our environment, and our patients and determine if there are ways to improve our service offering and reposition ourselves. It is not a time to simply retrench, rather that approach is exactly the wrong way to go and will ultimately impact the organization negatively. It is strategic growth and planning that achieves the success we all aspire to.