More from Ken
A very interesting short article recently appeared in The New York Times that explored the COVID phenomenon of “languishing.” The author defines languishing as “the collective fog we have endured…trouble concentrating, trouble staying motivated, trouble getting excited about the future.” The author goes on to say that languishing isn’t burnout and is not depression, but instead is a sense of stagnation, a sense of just getting by.
As I read the article it occurred to me that not only can individuals languish, but most certainly organizations can languish too. And if any organizations in America deserve to languish, certainly America’s healthcare providers qualify.
This notion of a long-standing collective funk introduces an entirely new fiduciary responsibility for hospital boards and CEOs. The past year has been unprecedentedly difficult; every organization, especially hospital providers, is entitled to its moment of languish. But no healthcare organization can afford to languish for long. So how does the board and CEO assure that its collective organization is now moving to a path to get excited about the future.
The way forward is to get aggressive about certain business tactics that assure the financial and strategic integrity of your healthcare organization. These tactical steps are as follows:
Recalibrate the strategic plan. COVID has changed everything, including finances, demand for medical services, the cultural context within hospitals operate, and the immediate need for healthcare equity and social justice. Given that any hospital’s pre-COVID strategic plan is likely somewhere between partially broken and mostly irrelevant, the first critical step to recovery is to regain control of everything your board and management team needs to know. What does your marketplace now look like? How disrupted is your local demand for services? Is your clinical delivery system still intact? Has your traditional competition changed? Has your organization’s place within the competitive space changed? The questions are endless. But all of the essential questions must be posed and answered within a quantitative analytical framework. And right now, especially, that framework must be technically flawless.
Reassess the organization’s financial integrity. The financial questions are going to come fast and furious. Has the basic financial integrity of your organization been damaged? If so, how damaged? How do your pre-COVID and post-COVID operating statements compare? How do your pre-COVID and post-COVID balance sheets compare? Pre-COVID, what was your estimate of capital capacity? What is your revised estimate of capital capacity? If the strategic plan is changing dramatically, are your total financial resources still sufficient to support that post-COVID strategy? Again, there are many more questions than easy answers, and, again, the financial analytics must be impeccable.
Rework costs. The third tactical tool necessary to push your organization forward is bringing post-COVID costs in line with post-COVID revenue. I have written on this point previously. Let’s add to the discussion the note that your organization will languish indefinitely if the overall cost structure cannot be brought into line to assure ongoing sufficient profitability and capital capacity. The post-COVID period will demand a new sophistication in establishing a lower overall cost point for your hospital. Four key principles will support this process: recognizing that much of the low hanging costs has already been picked, approaching cost reduction as a continuous process, focusing hard on corporate overhead and shared services costs, and taking a new and fresh look at automation, outsourcing, and offshoring.
The last 13 months of the COVID pandemic have been difficult in every way one might characterize difficult. One might say that hospital providers have earned the right for some time to languish. But let’s be candid: the “languish honeymoon” has to end sometime, and from my perspective now would be that time. All hospital boards and associated CEOs need to take a good look at their post-COVID organizations and immediately step forward to assure their organizations’ strategic and financial integrity.