Charles “Chuck” A. Peck, MD, recently discussed how to help hospitals survive financial downturns. A fellow physician and former hospital CEO, Chuck has seen many organizations through some very difficult times, both as a leader and a consultant.
Historically, many of the hospitals Chuck worked with had been doing very well financially. Then margins and cash flow began to erode. Left unchecked, the hospitals would trip bond covenants and be forced to emergently call for help. At this point options are limited, complex, and often unsuccessful. Those who have survived it know the “turnaround” process can be very painful and leave permanent scars on an institution.
Organizations that recognize stress early on see better results.
By contrast, acting when “stressed”—but not yet “distressed”—can be a game-changer. For many, this means overcoming denial. One of the biggest challenges for distressed hospitals is the belief that downward trends are just signs of a temporary situation that will improve on its own. COVID-19 has compounded this, putting additional strain on institutions while giving some the belief that once the pandemic is over, their troubles will be resolved.
As Chuck highlighted, financial recovery should take an enterprisewide risk management approach, focusing on five integral actions:
Clearly culture is critical, and that cannot be limited to the C-suite. Everyone, from clinicians to housekeeping, needs to understand their role in reversing downward trends and setting a course toward recovery.
One thing is certain—healthcare is not returning to the pre-pandemic status quo.
By hardwiring a measured response to stress and risk management, leaders and boards can strengthen resilience and better position their organizations for success. Most importantly, success relies upon identifying downward spirals early, while the heartbeat of the institution is still strong.
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