Ways to Turnaround A Hospital

With healthcare now being categorised as an industry, hospitals should understand the fundamentals of turnaround strategies

Brigadier Joe Curian

In many industries, business units and institutions slip into the red, and the reasons are attributable to many factors. So, is it in the healthcare industry. We all know that a large number of new hospitals have been coming up in India. The other side of the story is that a large number of existing hospitals are also becoming sick. Turnaround strategies are therefore relevant, important and absolutely essential for the leaders of the industry to understand.

Like the five senses possessed by the human body, which are equally the causes of pleasure as well as pain, there are five categories of risks that can jeopardise the health of a hospital. This can be at the time of take off or midway through the growth of the institution. I would categorise them as: start-up risks, financial issues, operational issues, regulatory risks and liability risks.

The very need of a turnaround comes up mostly because one or the other of these got ignored either at the start or midway through the growth of an institution.

Strategies to Adopt

While understanding the causes of illness of a hospital, one needs to also consider the cures. Turnaround strategies can be categorised into three different, but inter-related approaches. These are:

• Market-based strategies
• Internal strategies
• Quality-centric strategies.

Market based (external) strategies

In this, the first step involves going back to the drawing board and starting with the market itself. Re-survey the market. Reassess the market. In fact, this should be a continuous process even if one is making profit. This is because the characteristic of the market is dynamic. The point of view of the customers (patients) as also the competitors at play, need to be addressed. Re-look at your positioning. Re-look at the expectations of your patients today, as against what they expected from you say, three-five years ago. The questions one must address would include whether there exists excellence in skills, including soft skills in our hospitals. Is the technology current? Is there excellence in process delivery? Ultimately, is there excellence in patient outcome? The trick is in exceeding their expectations.

Strategic erosion is a silent killer. Often, hospitals slowly and quietly slip into the red and the realisation of this comes too late in many cases. Prevention of this erosion consists of a five-pronged strategy. his involves the market on one side and the product on the other. It also involves process watch and brand-building. Few of us understand the benefits of partnering with the Government, NGOs and Corporate Social Responsibility (CSR). Arrest strategic erosion - and you are unlikely to need a turnaround strategist!

Internal Strategies

Essentially, these refer to operational efficiencies. Operational efficiencies are supported on a tripod consisting of structure, technology and process. There must be a very clear demarcation of the line of control and the span of control, although in a hospital setting, there will be dotted line relationships that transgress the conventional lines of control in an organisation. Ask a loss-making hospital if they have a clear hierarchical structure that clearly defines both span and line of control and both authority and responsibility made known at every level. It is most likely that these would have not been defined.

Very often, the focus on internal efficiencies would end up in the level of technology vis-à-vis the market expectations. Need for technology upgradation would be the first observation. The other possibility would be under-utilisation of technology in which investments have already been made.

In a healthcare delivery system, the process itself is the ultimate product. It is the total experience of a patient that gives the feeling of safety, comfort and efficiencies to the customer. Unless there is process improvement on a continual basis, it will be difficult for a hospital even with good technology or structure to survive and grow. Therefore, internal strategies must ultimately focus on the internal processes if a hospital is to stay-put and grow. The key to turnaround would often lie in reworking the internal process.

No turnaround strategy can succeed without addressing the people dimension. This is because creativity and innovativeness are not found in inanimate objects like facilities or technologies per se. It is the people that create 'vibrations' within. It is leadership across the board that will bring in change for the better. No amount of time and energy spent on the people would be wasteful in a turnaround strategy. Some of the business leaders even today, believe that it is not the job of the sub-ordinates to think, it is only that of the CEO. Nothing is far from the truth! We need leaders at every level who would take ownership and be creative. We need to train people and motivate them to take risks. We need people to dare and accept mistakes made at times, in the process. Ultimately, we need people with integrity and a value system, for, in the ultimate analysis, it is the people that will make your strategies a success or a failure.

Quality-centric Strategies

Quality-centric strategies depends on a continuous monitoring of various parameters so that each of these can be viewed against a benchmark of quality. Each of the parameters or sub-parameters needs to be monitored for correction if required. This strategy could be adopted in organisations that desire minimum 'rocking of the boat'. For example, four categories of indicators are monitored at three different levels, one-target, two-threshold and three- panic. The outermost circle indicates the target. The middle represents the threshold and the innermost circle indicates panic. One can monitor the inter-relationship of eleven key metrics across the four categories. Growth, financial performance, quality of care and satisfaction index. The metrics have been indicated under each. It is possible to turn around a hospital by working on the key indicators that have been categorised at the levels of benchmarking that the turnaround strategists may like to put down.

Conclusion

A hospital is part and parcel of a larger system, where there are multiple stakeholders, both internal and external. Integrating the resources and the efforts that go into each business unit to harmonise the expectations of the stake holders is the ultimate challenge in such scenario. This is the challenge of all turnaround strategies.

With acknowledgement of use of inputs from many institutions including Harvard Medical School.

The writer is Group President, Global Hospitals Group
Email: joecurian@globalhospitals.net