H&HN Weekly 3/3/09

I recently spent some time in Gloucester, Mass.,
watching little boats—the precarious remnants of a once-mighty fishing
fleet—toddle in and out of the narrow harbor neck. I thought about the
so-called perfect storm, that combination of factors that had never
been seen before that overwhelmed the hardy little boats and swept men
to their deaths, and about Linda Greenlaw, the best-selling author and
surviving captain of a fishing vessel, whom I had met—oddly, it seemed
at the time—at a health care conference. I sat on a little deck by the
water reading Nassim Nicholas Taleb’s The Black Swan, a book about the seemingly impossible, unpredictable events that reshape our lives, our cultures and our shared history.

Ladies and gentlemen, this is it. The impossible is
here. The Great Bust is drying up donations, withering endowments,
making the “accounts receivable” line grow with fungal speed as it
rapidly ages and decays, just as the baby boom generation is coming to
need more and more health care, at the same moment the ranks of the
uninsured and underinsured and insecurely insured are swelling, at the
very time that the likelihood and reality of reform disrupts all
relationships in health care but brings little likelihood of vast new
streams of cash from a government courting a Zimbabwean future by
printing ever-larger bales of dollars.

The list of threats goes on, the ramifications and recursive loops pile upon another. What are you going to do about it?

The Wrong Decision

I came out of a curve while driving through the hills
of the Redwood Coast north of San Francisco, accelerating into the
dark, and suddenly there was a deer, right in the lane, staring at me,
transfixed by the lights and the roar, its eyes shining. I made a quick
decision to pass in front of its chest, as there was less room behind
its tail and no time to stop. It was the wrong decision. At the last
moment the deer leaped forward, directly into my bumper. The times
bring metaphors in herds, precisely because we are all struggling to
get our minds around not only what is happening in the world, in our
industry and in our institutions, but also what is happening within our
own heads.

We all get stuck. We lose options. The world narrows.
There seem to be no choices any more. If we once had a direction, a
sense of future, a momentum, we can come to feel that we simply must
leap as the danger bears down on us.

We will just leap, we will cut staff, slash programs,
cancel capital expansions, scale back procurement, hunker down, demand,

The circumstances are mandatory; the mind-set is optional. Remember the motto on the cover of the Hitchhiker’s Guide to the Galaxy:
“Don’t Panic!” Kipling has been re-Kipled in various ways, such as: “If
you can keep your head when all about you are losing theirs, then
clearly you have no clue about what’s really going on.” But Kipling was
right, and no reworking is necessary: The mind-set is yours.

Seeking the Path

The key to a useful mind-set that helps us navigate
this extraordinarily fluid moment is to think of it as looking for the
path to a future that works. Let no crisis go unharvested of its
opportunity. With this in mind, there are two things to notice. First
is that the major themes being trumpeted across health care—searching
for quality, lower cost, transparency, strong internal processes, the
greatest value for the customer—do not run counter to the short-term
needs of survival. In fact, the crisis makes them more imperative. The
second is that your institution is not in this alone. The very factors
that weaken your position weaken all the other players—and this fact
provides some real possibilities.

The path out of crisis is the path to the future.

If there ever was a time to demonstrate value, to get
your costs down and quality up at the same time, to get a firm hold on
your processes, this is it. The economic crisis will force us all to
look for the low-hanging fruit. And indeed, organizations that have
seriously embraced “lean production” systems and the like routinely
show improvements of 50 percent or more in their key metrics.

But the quick, direct plunge into process optimization
that yields the best short-term results will also lay the groundwork in
the organization for the long-term hard work of iterative
re-examination and re-engineering of every process over years. It is in
this forced fire, in fact, that we will begin to see the end of health
care’s Dickensian addiction to unquestioned paper-shuffling and its
tragic and scandalous aversion to serious, core automation. Remember:
The airlines did it when they were in bankruptcy, the cost/quality
benefits are that large.

With Crisis Comes Opportunity

The atmosphere of crisis makes the moment more ductile
in a way not available at other times. If hospitals and health networks
are clear about what specific aspects of reform help or hurt their
survival, and are ready for throwing money, ads and lawyers into the
breach, the terrible moment provides more opportunity for change than
ever before. Indeed, the lineup of forces is already strikingly
different from what it was in the early ’90s, with business voices and
even health plans lining up on the side of some kind of reform.

If you have concluded that you need to be in the retail
and urgent care businesses, you may find that the hard times have
weakened your competitors, dried up their financing conduits, forced
them to cut back on grandiose expansion plans, and forced them into
liquidation or left them eager for partnerships.

If you have concluded that you will be better off
absorbing a neighbor hospital and rationalizing your programs, you may
find your target more amenable to wooing.

If you have decided that you need to hire more doctors,
build teamwork in core areas, get more hospitalists on board, and
expand your primary care reach, you may find that doctors are more
ready to play as their own business suffers and retirement plans are
pushed off.

If a newly liberal atmosphere emboldens the unions, it
may also leave their members feeling less secure and more ready to
dicker, knowing that a health care job at a large institution is as
close to a safe harbor as one can get outside of working for the

And now we are in a bar melee in some Western: Anyone
who wastes time hung up on the astonishment phase (“Holy Moses! This is
a fight!”) will get thrown through the window. The survivor is the one
who notices who is off balance, who is reloading and who has had one
too many.