Charles A. Peck, MD, and Harry Greenspun, MD, discuss how to recognize and reverse downward financial trends to avoid distressed hospital situations.
During my anesthesia residency, one of my on-call duties was to respond with the “code blue” team. Upon arrival, CPR was typically in progress and we would intubate, medicate, and defibrillate the unfortunate individual.
But, contrary to how it was portrayed on TV, none of these patients suddenly coughed, opened their eyes, and asked what had happened. Instead, although some survived their initial cardiac arrest to be transferred to the ICU, only a few recovered sufficiently to walk out of the hospital.
Since then, clinicians discovered that the time to act was well before the heart stopped beating. The focus shifted from last-ditch (and largely ineffective) heroics to identifying when patients were on a downward, but still recoverable, spiral. That’s when to summon the team, whose broad-based expertise can make a meaningful difference, reverse the course, and dramatically improve outcomes.
Put simply, it’s easier to cure the sick than to raise the dead.
I was reminded of this when speaking with my colleague Charles “Chuck” A. Peck about helping 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 in our conversation, 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.