More from Ken
In chaotic times, when good ideas are hard to come by but more important than ever, executives need to find inspiration wherever they can.
Enter Satya Nadella, CEO of Microsoft. Nadella has emerged as one of our most thoughtful business leaders. In his six-year tenure, Nadella has remade Microsoft from an aging tech giant on the verge of slow decline into a highly relevant and fast-growing innovator, increasing Microsoft’s market valuation from $400 billion to $1 trillion. A critical part of the company’s change has been a turnaround in the Microsoft culture from “know it all” to “learn it all.” If you are looking for inspiration, Nadella is a good person to turn to.
A rare and crucial CEO skill, essential in times of high pressure and massive change, is to translate complex market conditions and strategic ideas into highly consumable messages. Such messages allow a CEO to communicate change in an understandable and compelling fashion to all levels of the organization, as well as to shareholders and the public. An effective message helps companies to organize their initiatives, establish priorities and timing, and understand interdependencies. Perhaps most important, a strong message can help assuage confusion, clarify ambiguity, and inspire employees to see the path and benefits of change.
For COVID-19, Nadella has come up with a truly excellent consumable message—one that applies as well to Microsoft as to America’s hospitals. That message is: respond, recover, and reimagine. Let’s look at this message in parts and as a whole.
No one is entitled to lecture hospitals on response. The response by hospitals and caregivers to the COVID-19 pandemic has been extraordinary. America’s hospitals have done whatever it takes, spent whatever money necessary, to save lives and protect their staffs and communities during this overwhelming situation. The hospital response has been heroic and compassionate.
As challenging as hospital response has been, the recover phase will be that much harder. Anecdotally, hospitals have reported losses of millions of dollars per day. According to the American Hospital Association, hospitals will lose more than $200 billion during the pandemic. In April, hospital operating margins fell 176% from the same period last year, plunging virtually all hospitals deep into negative territory, according to Kaufman Hall data. Outpatient revenue fell 50% from last April, and inpatient revenue fell 25%. Discharges declined 30% from last April, and ED visits fell 43%.
Along with this financial hit, hospitals have seen their traditional operations greatly disrupted. Use of physical space has changed, virtual care has skyrocketed, workforce setting and roles are shifting, and volume expectations are hard to predict.
Recovery will require a hard look with fresh eyes at almost every aspect of the organization. Questions will need to be more probing than those in almost any previous planning exercise due to the major changes and hazy outlook caused by COVID. For each core element of the organization, leaders will need to understand its purpose, function, outlook, relevance, and even necessity in a post-COVID environment. Under no circumstances can hospitals take the kind of revenue shock, volume decline, and demand changes they have had and not require a reworking of structure and operations to regain their financial and operational footing.
Inevitably, some organizations will want to pick up the pieces scattered on the ground from COVID-19 and put them together in the same way they were before. It’s only human nature to default to the known rather than try to imagine something new, especially when high uncertainty means high risks.
However, defaulting to the norm misses an opportunity to re-envision what healthcare could look like—what it should look like—on a hospital level. For years, hospital leaders have tried to dramatically improve the efficiency of healthcare delivery, the coordination of healthcare’s fragmented pieces, and the ability to influence community health. The results have been mixed. Here we have a time when everything from care models to administrative processes appear open for change. It is an ideal moment to begin remapping healthcare delivery to support the longstanding goal of dramatic improvement.
Leaders face very basic questions as they look to the future: What did care delivery look like before the revenue shocks of COVID? What will it look like afterwards? Will our current strategies serve us in the future environment?
For almost all organizations, I believe that the answer will be no. Against that backdrop, the only responsible steps for hospital and health system executives are to develop a point of view about the future environment; reimagine the goals, role, and functioning of the organization; and develop a detailed path toward making the reimagined organization a reality.
A Moment for Multitasking
While each component of Nadella’s COVID message is compelling, the totality of the message carries equal weight.
The three components are not steps to be performed in sequence. Rather, they form a tight interdependence. Response informs the degree and nature of recovery. The degree and nature of recovery inform the market condition and the organization’s resources and opportunities to reimagine.
Traditionally, multitasking has not been a strength for hospitals. For complex organizations in complex systems, it is difficult to attend to the task at hand while also considering how variations on a seemingly infinite number of entrenched structures and processes could influence a hard-to-discern future state.
This is a moment when multitasking is imperative. Organizations that do the best job multitasking will be the most successful post-COVID. Leaders need to keep their eye on immediate response. They need to move now to start recovery in order to temper the associated pain. And they need to weave a tapestry of a new future from the threads of response and recovery so that their reimagined version of healthcare delivery has the very best chance of becoming reality.