Those of you who regularly read this column know that earlier this year we discussed Jim Collins’ four principles for managing during the COVID crisis. As a reminder, those principles were readiness, discipline, competitive separation, and lastly a transactional culture vs. a relationship culture. I am guessing that most readers found the first three principles fairly straightforward, but the concept of transactional vs. relationship cultures much more nuanced.

I think what Jim Collins was suggesting is that in recent decades, corporate and healthcare America have pivoted sharply toward a business culture that is transactional at its core and, at the same time, has de-valued a business culture based on traditional relationships. This observation is impossible to deny. In this economic era, America’s most successful companies are built on a virtual, and by definition, transactional platform. And competitive pressures being what they are, this forces all companies toward that same transactional platform.

But what Collins is suggesting is that in a crisis, the most durable business culture, both internally and externally, is one built around relationships rather than transactions. Essentially, this concept suggests that, in a crisis, a transactional culture will fray while necessary strength will come from critical relationships among a healthcare organization’s leadership team and board, and between the organization and its employees, caretakers, vendors, payers, regulators, governmental entities, and various communities.

Recently I was reviewing these Collins principles and concepts in some depth during a presentation, when a hospital CEO made an important clarifying point followed by a remarkably relevant question.

The observation was that healthcare organizations have rotated toward a transactional operating platform because that platform is highly correlated to efficient operations, consistent levels of clinical care, and excellent financial performance. The implication of the comment was that if an organization pivoted away from this transactional culture, then financial performance would accordingly suffer and suffer at a time when any healthcare organization could least afford such a downturn.

Over the years, Jim Collins has presented executives with so many essential and perplexing questions. And here is another. Is the transactional culture vs. the relationship culture an either/or proposition?

I will offer a commentary although I am sure that Mr. Collins will provide further insight in his writing still to come.

I would suggest that for strong, well-balanced, and high-performing healthcare organizations, these business cultures are not mutually exclusive.

Rather, high-performing organizations recognize that in certain business environments a transactional culture will dominate, but in other environments, such as the COVID pandemic, that culture will be less effective. Faced with a black swan event (two in the last 10 years), a strong organization, with well-balanced leadership and governance, would be able to retain its transactional discipline, while at the same time activating critical relationships that are essential to first-class crisis management.

As I write this column, the pandemic has evolved to its absolute worst phase. More cases, more hospitalizations, and more deaths. Yet every day America’s hospitals answer the call. Every day hospitals bring the necessary clinical, scientific, and intellectual resources to the fight to take the best possible care of our country in its time of greatest need. As described above, making the very best management and governing decisions is a pre-condition of that fight, and steering your organization’s culture to exactly the right spot is a first principle to assuring your hospital’s post-COVID success.

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Kenneth Kaufman

Managing Director, Chair
Kenneth Kaufman offers deep insights on the economic, technological, and competitive forces undermining healthcare’s traditional business model.
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