By Joel French, CEO of SCI Solutions
While it is true that market reforms, contemporary cloud technologies, disruptive business models and care innovations will be required to transform our health industry, none of those elements will be successful without great leadership. Decisive and principle-oriented leadership will be the most significant factor gating how rapidly and successfully our industry migrates from fee-for-service to value-based-care. It will also be a key determinant of market winners and losers.
I have had the great privilege of working with many of the best health system leaders across the United States. At times, however, my travels bring me in contact with those who would benefit from leadership coaching or common sense. This post is the first in a two-part series highlighting examples of mistakes made at the leadership level, to be followed by a post illustrating examples of healthcare leadership at its best.
The following true, anonymous accounts illustrate alarming examples of leadership negligence or common business fallacies. To be fair, some of these statements may have been influenced by pressures to meet policy mandates, shrinking budgets, or other factors causing leaders to miss better ways of navigating unfamiliar territory.
- On a recent visit with a regional health system CFO, I asked “what is your net patient revenue?” The CFO first guessed a number, then retracted it and stated an alternative number. The variation between the two guesses was significant. After that he stated he would have to check and get back to me. Would you believe he did not know? The COO was in the room with us and did not know, either. This organization is part of a prominent national for-profit health system chain. If only the shareholders and board knew!
- While with a different health system (an academic medical center), it was reported that the CEO regularly made the following public declaration: “If it does not help us with Meaningful Use or ICD-10, we are not doing it for the next 18 months.” While some might affirm this leader for focus, I would assert focusing on the wrong things is not leadership. Markets are becoming more competitive, not less. People who focus inside their enterprise when all of their business comes from outside their enterprise simply will not be here in the next generation of value-based care. How will Meaningful Use be meaningful then? It simply won’t.
- During another recent visit, a proud leader boasted of their 60 percent inpatient market share, concluding relationships with the community physicians are not important because his health system was the dominant provider. Are you kidding me? This particular market has a large Fortune 10 self-insured employer that is just beginning to contract directly with high-value providers for bundled care of certain orthopedic and cardiovascular cases. When that portion of the population (and a large volume of high-margin cases) gets steered to a competitive provider 30 miles away, with the patient’s out-of-pocket cost being substantially less, the hospital boasting of its share of yesterday’s business model will likely not be able to cover their fixed costs.
- Yet another organization explained they did not track their revenue except at the departmental level, and contribution margin was not a metric they cared about. The ‘no margin, no mission’ axiom came immediately to mind. Would you want to receive care at a place like this? If an organization lacks the basic fiduciary discipline to properly track its revenue and margin, one might reasonably wonder how fastidious they are about sterilizing instruments or following basic quality standards.
You couldn’t make this stuff up if you tried.