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Can I Have a Do Over?

Carrie Vaughan, for HealthLeaders Media, January 23, 2009

I still wish my husband and I could take back the decision to purchase that 1986 Oldsmobile. Its transmission died a month after we bought it, so it ended up sitting in our driveway with grass growing up around the tires. Fourteen years later, it's still a sensitive subject to discuss (or write about).

While that decision dinged our pocket book and was a major inconvenience, it was still just a car. When a hospital CEO makes a poor decision, the repercussions can affect employees, patients, and the community at large. I certainly don't envy their position or some of the decisions they'll need to make this year. For example, no CEO wants to downsize 50 people. And the realization eight months down the road that you need 10 of those positions back because they really were vital to the operation of the organization only makes that decision tougher to bear.

Usually CEOs have exhausted all of the alternatives when deciding to cut a service or lay off employees or close a facility. But perhaps the even more challenging decisions are the strategic choices made throughout the year. According to a survey by McKinsey & Co. that evaluated which decision-making processes yield the best results, only 23% of decisions were made in response to an immediate threat. The report, which surveyed 2,327 executives from various industries and regions, also found that decisions made without a strategic planning process were twice as likely to generate extremely poor results—more than a fifth generated revenue 75% or more below expectations.

CEOs tend to have a large role in both the most and least successful decisions, the report says. Given the current financial climate, I'd say there's no denying that CEOs are facing extraordinary pressure to make sound strategic decisions.

Pete Knox, the executive vice president of Bellin Health in Green Bay, WI, recently told me that one of the key reasons some healthcare organizations struggle is because they fail to view their core strategic missions like service, quality, growth, people, and finances as a collective group of strategies that require the same resources. "They tend to fragment that," he says. Unfortunately, that means each group is focused on their own priorities and driving that agenda. For example, the financial people want resources for financial priorities, quality people want to focus on regulations, marketers want to expand services, and so on. CEOs are getting hit from different angles and sources, Knox explains. "You have to make high-level decisions on where to focus time."

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