It's official. The National Bureau of Economic Research announced this past Monday that the United States is in a recession, and has been since December 2007. Granted, this pronouncement wasn't exactly news to many Americans; it merely confirmed the downward economic spiral many of us have been observing for some time.
If you're a healthcare executive, you've probably figured out that the healthcare industry isn't recession-proof, either. In fact, CEOs from some of the nation's largest corporations painted a pretty dire picture of what the future holds this past November at Business Week's CEO Summit in Palm Beach, FL. Until the bond markets reopen, healthcare organizations are going to have big problems, said Ralph de la Torre, CEO at Caritas Christi Health Care. "We live and die on the tax-free bond market, and right now we're dying." Torre predicted that "as many as 20% of hospitals could close."
There are plenty of opinions on how executives should lead their organizations through a recession. Here's a snapshot of the advice being offered from various sources.
Communicate. I know, I know. Effective communication seems to be at the heart of just about every business improvement strategy. I've never heard anyone in healthcare say, "Communicate less." But as important as a robust communication infrastructure is during calmer economic times, it's even more critical now. Your employees, physicians, trustees, and community have all been impacted by the financial crisis, and many have considerable anxiety. Left unchecked, that anxiety can prompt people to envision far worse scenarios than what is truly the case. Frequent communication from the C-suite is the best way to calm people's nerves and stop rumors from starting.
Help where you can.A former hospital president suggested that hospitals should offer financial counseling to employees and reevaluate employee assistance programs. In addition, hospitals' outreach efforts and preventive care models may need to be revamped to help members of the community—many of whom are already postponing elective surgeries, forgoing medications, and skipping preventive care appointments.
Embrace uncertainty. It seems unusual, but a tough economy actually may be one of the worst times to merely maintain the status quo—unless your organization just happens to be thriving. I realize it's difficult to formulate your strategy in a shifting healthcare market, so it might seem like a good idea to just put everything on hold. And in some cases, building that new hospital wing probably should be put on hold. But a difficult situation can also present an opportunity for innovation and creative thinking.
This blog post offered some suggestions on how to re-energize your senior leadership team. For example, hold a meeting—if you haven't already—with senior leadership to determine which healthcare organizations will fare the best in a prolonged recession and what it means competitively for your facility. Then form a plan of attack.
Take stock. Healthcare organizations should do an honest assessment of themselves. This means engaging all stakeholders in the process—including physicians. It may be uncomfortable to do a 360-degree evaluation, but it can help identify inefficiencies and areas for improvement. For instance, if diagnostic testing is being overutilized—which it probably is—task physicians with ways to reduce unnecessary testing. Likewise, is your organization gaining all of the efficiencies it can from information systems?
Be responsible. While its still important to attend conferences and seminars, executives should set an example about how they are spending the companies dime. An example of what not to do can be gleaned from the auto industry when top executives flew on private company jets to ask the government for a financial bailout.
Be prepared. According to many experts, increased healthcare consolidation seems likely. Organizations shouldn't wait until they need rescuing before looking at potential partners—research other organizations now to determine which ones may be the best fit for you and what your organization can bring to the partnership.
Think globally. Having a clear understanding of the global economy and how other industries are being impacted by the financial crisis can help healthcare leaders determine the best course of action and avoid ineffective and costly mistakes, according to an article in the McKinsey Quarterly.
Focus on the long term. It's easy for senior leaders to get so focused on putting out fires that they lose sight of the long-term plan. Healthcare organizations should already be preparing for the recovery in the midst of this financial crisis, according to this blog post. One way to do that is to solicit opinions from key business leaders in the community and engage employees.