All leaders in the healthcare industry know that we are in the midst of
a most challenging decade. With the combination of governmental payment
reductions, pay-for-performance reimbursements, new ambulatory players
in the market, and the economic crisis for many which continues in the
US, many say we are in the midst of a “perfect storm”. So,
could it be possible that, like in so many weather-related storms, there
will be a rainbow appearing amidst the clouds?
If so, what then might the rainbows look like – the positives that
we might gain from looking at these challenges as actual opportunities
for improvement and energy for a forward momentum in our organization’s journey?
The regulatory changes and economic crisis are so widespread and so large
that they touch the lives of everyone who is part of the healthcare industry,
whether it be physicians, employees, volunteers, vendors, and even consultants.
Based on responses that they are seeing in other industries, as well as,
from other healthcare organizations, i.e. layoffs, benefit reductions,
and significant other expense controls, perhaps it has created a new sense
of urgency and readiness in their own minds to not only expect, but accept
and support similar changes in their own organizations.
In reality, the partners in Royer-Maddox-Herron Advisors are beginning
to see a greater openness to change which could not have been readily
created at times when all parts of the healthcare delivery system were
going well and moving in positive directions. Resistance to change is
the major barrier for preventing satisfactory companies becoming good
or great. Therefore, it only seems appropriate that, although we never
really enjoy the circumstances, taking advantage of this openness to change,
which has resulted from the stormy times, may create a competitive advantage.
Secondly, although healthcare has been significantly affected during these
challenging times, with the most challenging yet to come, we must remind
ourselves that our industry, because it continues to be somewhat “insulated”
from competitive market drivers, is relatively recession proof, at least
for the short-term. This gives us some time to still formulate our best
transitional strategies to be successful, another positive. However, this
“safe space” is getting smaller as we are seeing a number
of small and rural hospitals close, mergers of smaller systems with larger
systems continuing, new innovative entrants in the market, and most recently,
academic institutions reporting real concerns about their long-term stand-alone
viability because of the financial performance both of the schools and
their related hospitals.
And finally, these challenges are driving organizations to understand that
they must provide high quality and safe care at affordable costs with
enhanced accessibility as pay-for-performance is taking hold, and more
and more payers are rewarding value versus volume. These are all positives,
and indicate the healthcare industry is slowly becoming more patient-centric
versus provider-centric, and that perhaps clinical outcomes are becoming
more important than enhanced operating margins. These important transformations
would never be occurring if cash was flowing and operating margins were
large. For such changes to be hardwired into an organization, the leaders
of the organizations must realize, accept, and communicate to all stakeholders
that these challenges are here to stay!
So in the end, although we would all be much happier if the storm was less
severe and perhaps was much shorter in duration, we must also pause to
ask ourselves if indeed the storm is providing us with strategic opportunities
and transformational momentum which could not occur if the weather was
calm and the sun was bright. Yes….there could be rainbows in the clouds!