Could There Be a Rainbow in the Clouds?

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!

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