Main menu

If I Learned Nothing Else About Health Care.....

Whatever changes in national health care strategy are enacted in the future the fundamental operating approach of health care providers shouldn’t change.
Think about it.  Since the 1980s we’ve had the era of competition and managed care, reform efforts of the Clinton administration, increased prospective pay reimbursement strategies and expansion of Medicare into pharmacy expense and the passing of the Affordable Care Act.

And look around.  Plenty of winners around consolidation and integration of financing and delivery, brand development and leveraging and accelerated use of financial engineering.. 

Firms not part of consolidation strive to maintain autonomy and survive by hiding in a niche, staying out of the cross hairs, lining up referrals and owning the knowledge needed to optimize reimbursement.

No matter the type of firm and the form of reimbursement, the foundation to sustainable success will continue to include:

1.       Clean

2.       Customer service

3.       Cost

4.       Staff Turnover

5.       Leadership honesty

6.       Brand

7.       Head on a swivel

8.       Culture

9.       Challenged assumptions

10.   Listen and lead

Before you read further I need to explain what I mean by sustainable which to me is about providing health care services with a long term commitment and investment into better addressing current and future consumer and patient needs.   This approach takes a long view.  I'd contrast that with the players in the industry who seek the quick profit from the strategy du jour.  They troll for pockets of advantagous reimbursement and a referral base, leverage them both and seek to exit at the optimal moment.  

To be fair consolidation in the industry threatens any entity without the resources to be a buyer.  But operational excellence in health care service delivery is the best competive asset any firm in the industry can possess. 

And that involves:


It may seem strange that I’d label cleanliness as the first strategic priority to sustainable success for health care organizations.  But I believe it is.

Cleanliness demonstrated by a health care firm shows a commitment to all of the following that are critical to the successful operation of a health care firm:

1.       Attention to detail and discipline reflected by a clean, uncluttered environment;

2.       The creation of a focus that aligns every level of the company, from maintenance to the CEO and all parts in between;

3.       A building block for customer service excellence by conveying respect for your guest (and staff); and

4.       Not to mention, the clinical benefits of a clean environment.

Customer Service

While I’m aware of efforts to improve customer service in health care delivery, and of processes to measure and reward perceived customer service “excellence,” customer service in the industry does not meet the standard that should be required.

If any of the following are familiar, you’ll understand what I mean:

1.       At a behavioural health center, a former patient comes in to inquire about a bill.  The receptionist picks up the phone and contacts someone else, conveying, for all in the reception area to hear, the treatment received and the nature of the billing matter.  The person on the other end of the phone provides information to the receptionist.  She conveys it to the patient.  Out loud and for all to hear.  The patient still does not understand, puts his head down and walks out.

2.       At a family practice office, you arrive for your 10:00 appointment five minutes early.  It’s

now 11:00 and you’re still waiting.  A professionally attired individual presents at the reception desk and is led directly in to see the physician.  Whether a pharmacy rep, accountant or hospital representative, that individual is slotted in immediately.  The patient can wait.

3.       At a skilled nursing facility, staff are congregated at the nurse’s station.  Chatting, all too often, about things they shouldn’t be in a way where it is heard by those who shouldn’t hear it.  A complaint about a patient, family member or other staff member.  Gossip about another employee.  Rumors about leadership changes in the company.  All discussed with patients sitting nearby in wheelchairs, family members walking the halls and call lights being ignored. 

4.       At a rehab clinic, a standing room only waiting room of patients all scheduled with 9:00 appointments wait hours to be seen.  When one patient approaches a staff member about the wait time, the staff member responds dismissively “how do we know, you’ll just have to wait, or leave if you want to.”  She then rolls her eyes, turns to another staff member and says “I don’t care if he didn’t like it, they need us more than we need them.”

To be fair, there are pockets of improvement. The ER experience has been reengineered with better patient flow and communication.  Wait times are monitored and technology has been deployed to manage the patient’s appointment time. 

But, for each of these gains there are multiple examples of physical plants being designed and built that make the patient and visitor experience less comfortable and more confusing.  And, perhaps most critically, a lack of training and expectations created to improve the nature of the human interaction.

Plenty of investment in ill-suited buildings, insufficient investment in training staff, setting expectations and delivering a satisfied customer interaction at the consumer and patient level.


While there’s truth to the idea that revenue hides a lot of mistakes, don’t let it.

Any entity delivering health care services must be obsessed with cost management, do so with data discipline, and view cost from both a Per Patient Day(PPD) or Per Minute (PM) and Per Member Per Month (PMPM) perspective.

If you do, you’ll have a chance to succeed in any revenue environment.

If you don’t, someone else will, and will eat your lunch.

Some thoughts:

1.       Why do you need to understand cost from a PMPM basis?

a.       Two reasons:

                                                               i.      To your payor customers you are a PMPM expense – you want to know what this is, how you compare to your competitors and how to compete with the knowledge payors possess when negotiating with you; and

                                                             ii.      For as long as I can recall, the notion of risk shifting to providers has been a component of health care “reform” efforts.  While I’m sceptical, if that does occur you want to be ready to deal with it.

2.       Be honest with the numbers.  May sound obvious, but people like to kid themselves and various factions within an organization will create smoke screen turf battles to disguise costs.  Don’t let em. 

3.       A single metric must be identified as cost/minute or day that is ALWAYS spoken to

4.       Identification of components making up the algorithm resulting in that metric must require input from all affected constituencies to pick metrics, definitions and allocation methods.  Time limit the process to identify these and stick with it.  Focus on trend lines.  Evaluate the metric itself every year, be open to changes but NEVER lose the capacity to trend back in time sufficient to validate trend;

a.       Be prepared for the onslaught of the following:

                                                               i.      The metric is wrong

                                                             ii.      The data supporting the metric are wrong or not timely

                                                            iii.      No one else does it this way

1.       In what may be an operating oxymoron, these MAY be valid objections – but ignore them

5.       Beware of financial engineering used to create any outcome.  Settle cash versus accrual methods up front and make that decision meaningful to the operating analysis.  Use a cost of capital expense to reflect a/r and capital investments.  Make sure operating staff understands what these mean.

6.       If your product is time, define your expense in an all-in per/minute service provided (should be the same as per minute billed but sometimes is not) expense.

7.       If you product is facility based, use a per available bed day and per patient day basis to allow for comparison.

8.       No matter what accounting method is used, ALWAYS revert back to understanding the cash implications of every expense.  Accruals can be head fakes.

9.       The process of establishing a PMPM analysis may seem to many like an academic exercise.  But it’s one that allows you to see how your service presents itself on your customer’s P&L.  It’s an innovative undertaking that should be initiated outside of the normal operating environment.  But, if undertaken will allow you to better understand how your service is viewed by managed care firms,  how to relate your revenue, expense and margin to the expense incurred by the payor for that service and the relationship of that expense to the expense of care that represent alternatives to the service you provide.

10.   Make the cost metric a centrepiece of your culture.  Reward performance based on it.


Do not confuse low cost with efficiency.

Do not make the mistake of reducing your cost by not investing and most particularly investing to develop talent. 

Rather, demand in the metrics to see where the investment will return.    

Staff Turnover

I hesitated to add staff turnover to this list because of fear it would be misunderstood.

Low staff turnover by itself is not a measure of success.  The turnover rate must be referenced in combination with a productivity measure to be of value.

Pay attention to the following:

1.       Any entity that says it has never laid off staff.  Be comfortable adding the word “yet” at the end of this statement;

2.       Retaining under-performing staff because “something is better than nothing;” 

3.       Low overall turnover but disproportionate turnover among high performers; and

4.       Any firm that is not committed to objective, consistent performance management processes.

Each of these dynamics eliminate the ability to view low turnover as a positive performance metric.

Viewing turnover and productivity together measures whether you have the right staff and are retaining that staff. 

With that preface, consider these thoughts:

1.       The job “sold” in the recruitment process must line up with the employee’s experience – from on-boarding to orientation to training.  This includes the position, the expectations and most importantly the company culture.  Staff dissatisfaction begins when the company creates doubt and distrust because the promise and the truth do not line up.

2.       Be honest with yourself when facing the following questions:

a.       Am I hiring the right person or just filling the position;

b.      Am I keeping someone to avoid having to hire someone else;

c.       Am I delaying terminating someone I know will not succeed;

d.      Have I given underperforming staff prompt and direct feedback;

e.      If I terminate someone, will they be surprised?

3.       With each of the questions posed in number 2:

a.       Ideally the answers are yes, no, no, yes and no;

b.      However, reality doesn’t always allow that;

c.       But, being honest with yourself and moving closer to the ideal increases the chance of success.

4.       When you decide to make a change – do it now.

5.       Value loyalty as a business asset – unless and until it isn’t.

6.       View the organization as an organic, living thing – because it is.  Always make decisions in the interest of advancing the organization.  Doing the “right thing” cannot be seen as right if it harms the organization.  Take care when assessing that balance.

7.       Remember the referral and reputation value of current and former employees to the company and reflect that in your actions.

Leadership Honesty

In fairness, this section or trait of successful organizations is mislabelled.  It could be labelled simply Effective Leadership.  However, my preference is to strive for Leadership Honesty.

Effective Leadership means getting people to follow.  But, merely creating followers does not assure success of the endeavour.  Sustainable ventures need a higher level of commitment.  Leadership needs to ignite and sustain that commitment.

In my view, there are three levels to go through to achieve that commitment:

1.       The first is consistency, which is the building block of Effective Leadership notwithstanding the level of commitment sought;

a.       A clear destination;

b.      A clear sense of the behaviour expected of the followers and a clear sense of the rewards of doing so and the penalties of not.

2.       The second is transparency, where Leadership:

a.       explains the “whys” and “becauses” of their direction, decisions and actions;

b.      seeks input and engagement from staff;

c.       creates an environment where staff has confidence that they are informed on matters that impact them individually;

d.      in doing so, is open and consistent about what it cannot communicate and is willing to admit mistakes.

3.       The last is honesty, where Leadership:

a.       by committing to consistency and transparency seeks to build the trust needed to mobilize around a seemingly impossible task or to overcome in a crisis.

Leadership Honesty is fragile. 

Leaders can, and will, damage it unintentionally and unknowingly. At times they’ll mess up their commitments to consistency and transparency.   Sceptics will doubt leadership’s sincerity.  Leaders will need to retain their consistency and transparency in the face of scepticism and pushback.  And, leaders won’t know if they have created the commitment they need until faced with a critical challenge.

But, sustainability requires that these challenges be met and overcome.  Doing so requires that Leadership has built a foundation of honest leadership that galvanizes the trust needed to act as a whole energized to be greater than the sum of its parts.  The carrots and sticks of Effective Leadership alone won’t get it done.


Brand.  Overused, and misunderstood.

The best definition of brand for me is “truth of the promise.”

When someone sees your company’s logo what comes to their mind.  Is it what you intended?

What commitments does your organization make?  Are they meaningful?  Are they kept?

That’s brand.  Period.  And it’s critical.

Head on a Swivel

Please forgive the sports metaphor.

But I’ve had tunnel vision on a football field and paid the price for it. 

Happens in business everyday. 

My cautions:

1.       you’re most vulnerable when you think you’re not;

2.       constantly assess (I do SWOTs) your company and your environment;

3.       inside your firm, get a feel for what you’re not being told;

4.       every dollar you have…..someone else wants;  and

5.       keeping your head on a swivel is most effective when no one else notices.


As I’ve gone through this document I’ve provided varying levels of detail about each trait pertaining to the foundation of a sustainable enterprise.  There is a lot that can be written about culture but two points are important for me to make so I’ll limit it to those:

1.       Your organization has a culture whether you think so or not.  If you’ve defined the culture you want, it won’t just happen because you say so.  Pay careful attention.

2.       Taken together, every item in this document relates to what I see as a building block to a successful culture.

Challenged Assumptions

Sustainable organizations do so because they don’t take continued success for granted.

When you hear the following, alarms should promptly go off:

1.       We’ve always done it this way;

2.       We’re the best;

3.       Trust me, I know it’ll work;

4.       I don’t know why, someone else told me to;  and

5.       We can’t measure it but we need to do it anyway.

You get the idea.

Listen and Lead…and sometimes just LEAD

Repeat after me….direction, expectations and accountability.

If you’ve communicated these so often you’re tired of hearing yourself, good.  Now go repeat yourself again.


This email address is being protected from spambots. You need JavaScript enabled to view it.