What’s that old saying…the Chinese word for Crisis (Wei Ji) is a blend of Danger (Wei) and Opportunity (Ji)?  While the truth in this literal translation is debatable at best, the concept has endured since the 1960s, probably because many have found it to hold elements of truth.

The “Dangers” of Tight Capital  Emerging from Covid19, inarguably a major crisis, many organizations found capital scarce, in part because lower margins during the pandemic resulted in lower (or no) funding of capital pools.  While there has been some improvement in margins for the industry as a whole in recent months, they may be slowing to a new normal.¹  And, the improvements have varied significantly across hospitals. Sustained profitability is a delicate balancing act. Funding for capital investments is still limited.

Lower margins usually translate to less capital to allocate to potential projects, and with lower margins, there is less ability to compensate for lower-than-expected returns, so the risks associated with any underperforming or failed projects are much higher. This clearly resonates with the “danger” part of the crisis definition.

The Post-Covid Opportunity  In true fashion regarding the other half of the crisis definition, many health and human service organizations found the Covid19 peak years to be a period of opportunity, in part because it required substantial innovation to respond effectively to the scope and depth of human need.  Responding to the Pandemic accelerated the pace of many innovations (e.g. tele-medicine, working remotely) and initiated others (e.g. supply chain improvements).  Furthermore, the pace of innovation seems to be continuing, inspiring as many proposals for capital investment as ever…maybe more. Many of these innovations require substantial funding, including shifting care to new settings, leveraging technology, and workspace redesign.

The Dilemma of an Era of Tight Capital  When viewed in this way, the Crisis of Covid19 Pandemic indeed meant both danger and opportunity for capital investment. If these conditions persist, at least into the foreseeable future, how do leadership teams select the “best” projects to fund with limited capital from a large number of potential “game changers?” This series explores how to get the most out of capital investments in a period where capital is tight, and risks are high.

Selecting the Best  In the next three posts, we will cover four key characteristics, and a few useful tools, for selecting the capital investments most likely to succeed. Your organization may have already established criteria for evaluating various capital requests. However, in the current environment the focus needs to sharpen on investments that will balance a rapid rate of return with other important considerations.  We will review considerations that help ensure both sustainability and also synergy with the evolving US health care landscape in future posts.

Ensuring Success  Then, in two additional posts, we will cover six important considerations, and the associated steps you can take to help ensure the success of the investments that you choose.  Selecting the capital investment opportunities that best fit your criteria is still no guarantee of success, especially in this transformative period.  Societal pressures, evolving consumer expectations, and technological and clinical advancements result in a dynamic environment.  However, there are ways to foresee, or at least minimize the impact of, potential disruptors, and enhance the resiliency and impact of your project.

Are you and your leadership team prepared to get the most out of your capital investments?  Let us know if you have any additional thoughts as this series unfolds, or if we can be of any help applying these ideas in your capital project review, selection, and implementation processes.

Roberta Jelinek  and Jeff Schilling

(This is the 1^st of 7 posts in the series.  For the full article, contact either one of us.)

¹ April, 2024 edition of Kaufman Hall’s National Hospital Flash Report.

Five years ago this month, I had a chance to do something I had always wanted to do, but never thought I would.  The previous Christmas, my family surprised me with a paid pass to the NASCAR Racing Experience: a chance to drive a real race car on one of the championship series tracks.  Having always been a car racing fan, they knew this would be a very special gift.  So, in May 2019, I headed to Michigan International Speedway (MIS) to live out that dream.  But what I, and my family, didn’t know is that this experience would be very memorable in more ways than one.

Confidence is Good, Right?  Like almost everyone, I suppose, I thought of myself as a pretty good driver.  I’ve seen many races of different types of cars over the years on TV and was fortunate to see some in person, from dirt track races to premier events including the Daytona 500 and the Detroit Grand Prix.  But on top of that, I’ve also studied cars and car racing throughout my life, accumulating knowledge of things like “push” (understeer), downforce, and flattening a curve, so I thought all of this might make me a better than average first timer in a real race car.

A Whole New Ball Game  However, none of this armchair knowledge could have prepared for me for the actual experience of guiding a 700 horsepower race car around 18° banked turns at 150 mph.  Even in the beginner package, you’re driving a fully equipped race-ready NASCAR on a championship series course.  It’s very different than driving your own car to work or the grocery store, and you’ve got about three to four laps to try to adjust.  I quickly found myself making many adjustments.  For example, my sense of timing of when to start turning the wheel as the next curve approached was very “late” at these speeds, at least for the first lap or two.  Suddenly, I felt very humble.

It may sound like this all goes by quickly, and I guess it does.  But like many things that get your adrenalin flowing, time also seems to slow down, making the memories of those few laps very clear.  And with time to reflect over the next few weeks, I started realizing how much I had relied on things already familiar to me.  Three important attributes of high-performance teams were very evident that day, attributes that I learned years earlier in classrooms and online learning courtesy of the Talent Development Team at Trinity Health.  Here’s what I learned again at 151 MPH:

Safety First  This may be surprising when talking about something like car racing, which on the surface seems risky and dangerous.  But from the moment I arrived, everyone I met and everything I did before and during the driving, conveyed a focus on safety...and in a reassuring and educational way, not in a way that made me nervous.  This intense safety focus is also very evident in the quality of equipment, clarity of the mandatory class you attend before getting into the car, and ongoing guidance from the staff. This resonated with me on so many levels of my experience with Trinity Health, as an employee and as a consultant seeing the many ways it is woven into curriculum, process, and culture, but also as a patient in the way care team members interact with me.

Customer Focus  Every staff member I interacted with at the NASCAR Racing Experience struck the perfect balance of serious tone and fun, making the whole experience reassuring and enjoyable.  I don’t think they could have achieved this without first learning what customers would want (and even be delighted with) in this kind of experience, and then always trying to find ways to make it better.  I have seen that same customer (patient) focus over the years at Trinity Health, in their long-standing commitment to seeing the “whole patient” (mind, body, and spirit), and the emphasis on continuous quality and process improvement, all things I learned about as a Talent Development Team member.

Trust  When you are doing something you’ve never done before, something where you have no real comparable experience to lean on, is there anything more valuable than a mentor or guide?  As I took those first laps at MIS, I immediately relied on my “spotter”.  Each driver is assigned to one, and from his viewpoint above the grand stands through radio communication wired into your helmet, my spotter calmly talked me though every shift and turn, let me know if there were any other cars near me, and coached me on how I could improve on the next lap.  With positive reinforcement and helpful guidance, he immediately earned my trust.  I learned many team building skills working with the Trinity Health Talent Development Team over the years, and trust…how to earn it, build it, and give it…has been one of the most enduring of those lessons.

Then and Now  It’s been five years now, but the memories of that experience – the sights, sounds, and exhilaration - are still very clear to me.  And some important lessons, first learned years before in a totally different setting, are clear to me as well.  And today, I think I understand them at a deeper level, and can see more opportunities where they could be applied, than I did before.  I guess that’s what “relearning” can do for you.

Thank You!   Thank you to my family for a once in lifetime experience and the treasured memories that I can add to so many others.  To the people of the NASCAR Racing Experience, thank you for the chance to live out a dream, if only for a few laps, and one of the best customer service experiences I’ve ever had.  And to D'Anne Carpenter, Jill Kotwicki, Renee Therrien, and Geralyn Quick, and the whole team past and present, at Trinity Health Talent Development, thank you for teaching me (the first time) some of the fundamentals of high-performance teams.

As a Strategic Planning Consultant, I am definitely a “trend watcher”, and one of the reasons is to make sure clients are considering any relevance of what I call the “Strategy du Jour” to their Mission, Vision, and Goals.  It seems that there is always at least one strategy (sometimes more than one) that is getting a lot of attention in leadership and management literature.  Back in the first half of the 2010s, one such strategy was innovation.  The idea of becoming “an innovative organization” and making “increased innovation” one of their Goals was becoming very popular.

The Innovation Learning Curve  So as a trend watcher, I was reading a lot about innovation during those years, and some of what I learned was surprising.  I found that there is a lot more involved than one might think with becoming an innovative organization.  Certainly, true innovation can have significant rewards, but the innovation rarely, if ever, comes without significant investment.  The subject of innovation had become so popular, that I assembled what I had learned from the literature and some clients into a presentation, “Innovation: From Start to Sustainability”, that I was honored to make at the Spring, 2017 Conference of the Michigan Society for Healthcare Planning & Marketing.

It’s about the Process  One of the most important things I've found out is that a successful innovation involves much more than the initial spark of an idea.  Moving from idea to a market ready change that will be readily adopted  is a process with four distinct stages (see diagram at right).  Each of these stages has to be consciously and actively managed, or the overall process will be less effective…producing fewer or no real innovations.

Once organizations understand all that is involved in the process of innovation, they also need to be prepared to support the process by meeting three other requirements, each with some important nuances.  These three requirements are:

• The Right Motive
• The Right Organization
• The Right Resources

Back on Top?  I’ve been fascinated by how many people have talked with me about one silver lining in the Covid19 Pandemic.  They described how when they and others from different organizations came together to respond to the crisis, it led to a number of innovations.  Necessity is the mother of invention, as they used to say.   To a person, their hope was that this collaboration, often leading to innovation, might continue in some way.  Indeed, the topic of innovation seems to be very popular again.  Maybe it’s time for a refresh on how to create the best pathway for innovation.  Let me know if I can help with a quick discussion or a full presentation on the topic.

Jeff

In a recent Strategic Planning work session with a client, a Board member asked if the organization was running the risk of “Mission Creep”, which they felt should be avoided.  Also called “Mission Drift”, this is when organizations begin to diversify into services or products that are increasingly different from their original purpose and offerings.  In the US and some other economies, when taken to the extreme in pursuit of more earnings, this sometimes resulted in a conglomerate, a holding corporation with many subsidiaries that are unrelated, or at least seem to be.

Stick to Your Knitting  Critics of Mission Creep warn organizations not to stray too far from their core purpose, and to stick to what they know and do best.  Moving into areas where the organization had no experience or fundamental capabilities, either of it own or though partnership, is certainly a high risk and could have severe consequences.  And there is much to be said about knowing what you do best…and continuing to improve it.

We’re in the Railroad Business  But taken to the extreme, a complete lack of any evolution in purpose and portfolio is also dangerous.  This Mission Obsolescence ignores the reality of a constantly changing world, society, and customer.  It’s true that with customers, some of what they need and want from your organization rarely (or never) changes (e.g. safety, respect).  However some of your customers’ key quality characteristics - the attributes they use to evaluate how good your services or products are – do change over time.  This is inevitable in a world of constant innovation.  History has many examples of organizations and even entire industries that failed, or almost failed, due to mission obsolescence.  Remember learning about how railroads almost completely disappeared because they thought they were in the railroad business, all the while choosing to ignore the rapidly expanding world of transportation (cars, trucks, planes)?

Timing…and Information   So how does your organization find the prosperous “middle ground” between Mission Creep and Mission Obsolescence?  By keeping an ear on what your customers need and want and what’s happening with organizations like yours.  I refer to these as Market and Industry Assessments, respectively, and they are a critical early-stage component of Strategic Planning.  If like many organizations, you develop a new Strategic Plan every three years (or maybe less), make sure the process starts with thorough Market and Industry Assessments.

But don’t stop there.  The beginning of a new calendar year is one of several perfect times to refresh your understanding of what’s going on in your industry.  Why?  Because it is often when associations publish updated “Environmental Assessments” or other annual publications where they report on the latest trends, issues, and emerging best practices of interest to members. It’s also a good time, after the holiday rush starts to subside, to reach out to customers for their latest feedback and perceptions.  Staying tuned to your customers and your industry on an ongoing basis is the best way to avoid Mission Obsolescence and build the rationale for well-timed and well-planned Mission Evolution.

Let me know if I can help with an Assessment refresh, or anything else.

All the best in 2024,

Jeff

Back in the summer of 2015, I suggested that people should start building their “Collaboration Skill Set.”  The inspiration for this came from data I was seeing on the rise of collaboration, in particular formal collaborations such as mergers and acquisitions. They had been increasing steadily since 2009 with a noticeably sharper upturn in 2014, the year before I wrote my column.  Mergers and Collaborations have always interested the “Strategic Planner” in me as they are often the means to one or more strategic ends.

Different Time, Same Recommendation  Its now 8 years later, and Covid19 definitely had an impact on Mergers and Acquisitions, like most other things.  But like some of those other things, the impact seems to have been mixed.  After a dip in 2020, followed by a record high year in 2021, things look to have eased off again in 2022 and perhaps 2023 as well according to the most recent data.  Still, I think it may be time once again to sharpen your collaboration skills, even if formal Mergers and Acquisitions are slowing down.  That’s because I believe we are on verge of a period of unprecedented collaboration in general, and in this case, Covid19 was definitely a significant factor.  As I wrote in 2015, “Mergers may garner the headlines, but I think they are just one form of collaboration.  For every full, formal merger, how many work group consolidations, shared-service arrangements, or joint ventures do you think occur?”

Crisis > Collaboration > Innovation  Covid19 was a significant Crisis in just about every way and presented major challenges to customer interaction, supply chain management, cash-flow, capital investment, and workforce recruitment and retention, just to name a few things.  The urgency and human impact of the pandemic forced organizations to work together on a new scale and to a much greater degree.  In efforts to respond, they needed to collaborate and often develop new and innovative ways to deliver essential services and meet even basic needs.  This was nowhere more evident than in the health and human services sector.

Realizing the many upsides of these collaborative efforts, I think the organizations involved will be looking to continue them in some way, having seen like never before how collaboration can be a tremendous catalyst for innovation.  Indeed, I have been struck by how many stakeholders I’ve interviewed recently as part of Strategic Planning engagements expressing a desire to keep the impactful collaboration started during Covid19 going.  But that’s only one of two major drivers of collaboration I see emerging.

Right Tool Set for The Job  Not long before Covid19, many health and human services were beginning to understand the critical importance of Social Determinants.  Poverty fighting organizations like Community Action Agencies were learning about and trying to address Social Determinants of Poverty (SDoP) earlier in the past decade.  Not far behind them were health care organizations, realizing that Social Determinants of Health (SDoH) were at the heart of the “Complex Patient” – the 5% of the US Population that utilizes 50% of all health care resources (1).  Other types of human services organizations are realizing the same thing, and all these organizations are finding a lot of overlap among their social determinant lists.  But ask any of them how they plan to address social determinants and you will find that they are still looking for solutions.  I think the magnitude and complexity of addressing social determinants is another perfect storm for increased collaboration.  It will require the innovation that comes from collaboration among different organizations with different resources, perspectives, context, and ways of thinking to begin solving the challenge of social determinants.  So, this path might be Complex Problem > Collaboration > Innovation.

Growing the List  Back in 2015, I listed four great reasons for why organizations might consider collaboration at some level.  In 2023, I think we need to add a fifth and sixth to that list:

1. Greater economy of scale
2. Improved competitive ability and/or position
3. Increased access to needed resources and/or capacity
4. Expansion into new markets (geographic or product/service mix)
5. Responding to a Crisis
6. Solving Newly Realized Complex Problems   

If I’ve convinced you that the time is ripe for more collaboration, what about that skill set I mentioned back in 2015? I’ve listed some of the key ones here (see sidebar).  In some cases, you may find it helpful to engage an outside facilitator who can bring objectivity and additional expertise.  I also have a short simple guide to thinking about the different levels of collaboration, from the most informal, small scale of efforts to major, formal ones such as mergers and acquisitions.  It also describes the critical success factors to all levels of collaboration. If interested, just e-mail me and I’ll send it along.

In closing, I think the last words I wrote in that 2015 column still fit:

“Signs point to more and more collaboration in most industries.  Bigger isn’t always better, but working together toward common goals usually has the potential for better results.  Are you ready to thrive in an era of collaboration?  If you would like help with a specific collaboration effort or with building your collaboration skill set, contact me.”

Jeff

(1) Mitchell, E.M. Concentration of Healthcare Expenditures and Selected Characteristics of High Spenders, U.S. Civilian Noninstitutionalized Population, 2017. Statistical Brief #528. February 2020. Agency for Healthcare Research and Quality, Rockville, MD. https://meps.ahrq.gov/data_files/publications/st528/stat528.shtml