Healthcare Executives – Advice for coping with reduced money flows

Paul Richardson

Healthcare organizations across America are announcing multimillion dollar budget shortfalls due to healthcare reimbursement changes forcing them to cut costs dramatically. Internal to these organizations people are very stressed wondering what the impact on them personally will be. You should look at this as an opportunity to restructure, not just cut a little here and there. Most healthcare organizations have grown rapidly to cope with increased requirements but have not done it well. That is they have added complexity and more difficulty in communicating and a lot more cost. The needed cuts should be looked at as an opportunity to redesign organizations that will be nimble, efficient and provide the highest quality care possible for patients. The first thing to do is re-examine underlying assumptions, especially of the “we’ve always done it this way” type. It is obvious that there are better ways to run your operations effectively than the bloated, top heavy organizations you have become. If done correctly that new structure will afford much more opportunity for employees to mature and grow and be rewarded for it. I have heard some organizations are asking people if they want more staff or raises. That indicates they are starting with incorrect assumptions that the current structure is totally justified. I guarantee you it is not. Following is a list of actions that will make the best of a tough situation if healthcare leaders have the courage to follow them. To Healthcare Executives  Keep personalities out of it as much as possible. You aren’t running a rest home for people because you like them. You are running an organization that must perform much better with fewer dollars. You must be totally objective. You must examine those old habits of operating and reform them to work well in the new operating environment. That is, you have to hold up a mirror to the organization and face reality. It will be painful to reduce costs, but do it swiftly. The band aid on a hairy arm example should guide you. Get it over with. The organization will be in turmoil for a shorter time if you act quickly. Don’t fear making a mistake. You can change your mind and fix it if you were too aggressive or not aggressive enough. Remember in less challenging times organizations grow by adding appendages to solve problems. For example, the habit of adding coordinators to do what can only be done effectively by the line functions is a waste of resources. Correct mistakes that were made but no one wanted to face. A great example is the fad of 360 degree evaluations. A stupid idea. How can a leader lead if they are working to be “liked” as opposed to working to perfect the performance of their team? Honest feedback on performance is vital to improving organizational performance. A much better pressure relief valve is an open door policy to a

person’s boss’ boss. The stacking approach later in this list also greatly helps intraorganizational cooperation.  While I am at it; organizations like HR have grown too big and too powerful in the average workplace. Yet they aren’t on the field performing, they are off the field pontificating. Pare them back to what you think is the minimum and then cut 10% more. Do not cut staff by seniority. You know you have to cut but cut to make the organization stronger. Those long term employees who were going to perform better already have done so. The rest had ample time to change their ways. In all honesty the poor management feedback on performance is partly to blame. All employees should be “stacked” by job category from best to worst performer and their position as a percentile shared with each employee. It causes dialog that is often missing between employee and manager on what can be done to improve performance. Also, since the stacking involves managers of each category organization-wide it addresses the insularity problem too. There is no better guide to making “keep or let go” decisions. Do not use a formulaic approach to cutting staff, use a reasoned approach based on performance to date and potential for better performance in the future. Remember if you cut a position in one department you should consider the overall strength of the employee in that position and move them into a surviving job if they are better than the person who had been in that job. Recognize that those who won’t allow themselves to change gracefully will be a constant drag on performance. Perhaps they have irreplaceable skills or knowledge that you can’t do without but close supervision will be required to keep them from poisoning the people they work with. Provide strength in clinical excellence areas by providing highly skilled pros to assist staff with the difficult cases which also provides training naturally to the less skilled staff. After the cuts – even your “best” managers are far from competent managers, upgrade them through training and coaching. If they have to attend training on weekends, that is ok – they are exempt. You need training too. Streamline the management structure of the line functions– all healthcare organizations are top heavy with too many directors, VPs, etc. If you cut only at the lower levels you will be even more top heavy than before. Cut and wish them luck in their job hunt and help where you can. As before do it with a totally objective look at capability and potential for growth. Design the structure for optimum communication flow and cohesive and coordinated cooperation between departments. Don’t assume that a person in a position that survives the

change to a new structure is the best for the job. Moving someone whose position has been eliminated into a different job where they are the best qualified candidate is appropriate.  Take a meat ax to the overhead in support departments. You can cut by a quarter and if you do it right based on emphasizing the strength and reducing the weakness you will be able to perform even better than before. Let signs of turf protection and insularity guide your decisions on who to keep and who to let go. You can’t afford attitudes that aren’t aligned with the success of the total organization. This will seem like a Herculean task but it will result in an organization where communication is greatly enhanced, where nimbleness is enhanced and give you the room you need to provide excellent care to patients in a time of fast paced change. Eliminate the yearly goal routine as a basis for evaluations and raises. There are techniques based on the stacking process mentioned earlier that are always up to date with the changing realities faced by your organizations. You must maintain flexibility to face challenges. The current method causes people to work on “getting their raise” even if situations change and they need to work on something that is more important and hadn’t been known at the time of goal setting. This old Management by Objectives approach is obsolete in today’s fast paced environment. Lastly, leave room to give everyone who “makes the cut” a nice raise. This will allay fears and allow them to focus on doing the best job they can.

Remember Jim Collins’ assertion in his book, Good to Great, “People aren’t your most valuable asset, the right people are.” You have the opportunity to keep the right people. If you act swiftly you give those let go less competition finding another job than those who work for organizations who drag the process out. This has been only an outline of the biggest things to consider, there are many more that need addressing. This could best happen in the management training and coaching part of the process. I have done this sort of thing before especially the training and coaching. If you want to discuss with an objective expert, contact me. 719-355-5293

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