Reg's Blog

Post-Acute and Healthcare News and Topics

Friday Feature: Occam’s Razor and Management

When I have coached/mentored executives and senior management, I am always initially surprised by how much these folk want to complicate things. Healthcare is notorious for bureaucracy and to a large extent, folks that have worked only in healthcare have been socialized that complex regulations and rules and then, organizational systems for compliance wrapped with layers of policy and procedures are absolute necessities. Government likes its paperwork. Payers the same.

It is often said that healthcare is the most regulated or at minimum, the second most regulated industry in the U.S. Some would argue that nuclear energy is more regulated. Regardless, healthcare is complex but yet, there isn’t a requirement that the regulation-driven craziness must in turn, impact the business and what leadership/management does from an operating perspective. In other words, simplicity is possible in lots of ways.

Occam’s Razor is a principle that states that one should not increase entities or processes beyond reason, simply to explain or complete anything. In other words, when a committee isn’t required, don’t form one. When one policy suffices, no need to write multiple. When a policy isn’t required, don’t create one. When one layer of management is failing to achieve desired results, don’t add another layer. I could go on.

In healthcare, the first principle I try to drive into an executive is that the business model is truly about only two things: patient care and human capital (staffing). One requires the other and vice-versa. If the care is great and the staff are too or minimally, the staff are engaged and productive, a huge part of the operating requiem is being met. From this platform, great care, and great staff, everything else can flow with limited interruption and limited challenge. Sure, infrastructure is necessary, but frankly, it doesn’t require a whole bunch of layers or new bureaucracy. Arguably, and I have seen this happen, adding layers and new managers tends to reduce the quality of care, the productivity of staff, and then, the performance of staff. Success, for some reason, seems to breed the feeling that more operational structure is necessary, yet no real argument can be made via return on investment, for the same.

The primary objective of management is to achieve more while requiring and spending less. More succinctly, to create structure that is simple, consistent with the enterprise goal, rewards tied to outcomes, and people, in places with the capacity and capability, to produce the desired outcomes. Simple. As Steve Jobs would say, “tolerate only “A” players”. Leadership should exist to create a vision and form a structure that allows folks to swiftly and easily, incorporate the vision into an operating plan.

The application of Occam’s Razor to management and ultimately leadership, follows a pretty simple format. Mine is below. Happy Friday and enjoy the weekend!

  1. Focus and evangelize that work is about a process of caring for the patient – nothing else matters.
  2. In order to effectively perform #1 above, the work culture for staff must be interdependent – take care of each other.
  3. Reward outcomes that are measurable and tied to #1.
  4. Limit management and supervision to the bare essentials and fight against, additions thereto.
  5. Minimize meetings and committees – empower staff and management to make decisions.
  6. All business expenditures should be fundamentally tied to Return on Investment and a long view.
  7. Overhead should be levered as frequently as possible.  Find capacity within.
  8. Minimize policy and procedure to only that which is absolutely required.  Use protocols instead.
  9. Don’t let regulations and industry focus cloud the operating parameters.  Most of the conferences, seminars, and association newsletters serve a purpose other than your business.  Use them solely for information, not a how-to.
  10. Give feedback on how things are going.  Reward progress toward the goals and vision, often.  Skin in the game is how  and why “A” players remain.

 

Advertisement

June 9, 2023 Posted by | Uncategorized | , , , , , , | 1 Comment

Friday Feature: 5 Important Leadership Principles

Every successful organization shares a common trait – good or great leadership. I’ve written numerous articles on this topic and how the same is connected to employee retention, market share increase, brand dominance, and organizational wealth (balance sheet and cash flow). Fundamentally, organizations flourish under good leaders and flounder when leadership is poor or not present.

I’ve worked with many, many organizations in turn-around situations whereby, prior executives failed to provide solid leadership and operational performance demonstrated that lack of proper leadership. In senior living, the common signs of poor leadership include staff morale, too many unidentified supervisory or management positions generating bureaucracy but not results, weak financial structure expressed via marginal cashflows, census challenges, rate imbalances, no growth plan, marginal quality and service, etc. The structural imbalances are evident even if the basics get done.

There are only three business strategies: grow, milk, or sell. Selling occurs when a business decides that it either cannot exist on its own or it’s time to return capital to its investors. Milking often occurs before selling if the business has been successful. Milking entails skimming profits and cash, generally prior to selling. For non-profits, milking and selling are pretty much, moot strategies. Frankly, most businesses choose to adopt a growth strategy. Growth however, requires good, solid leadership and governance. Without these elements, a strategy for growth may be discussed or even outlined but implementation will not occur successfully.

I am a fan of Peter Drucker and Steve Jobs in terms of how leadership and growth are operationalized. From both, I’ve developed and maintained a set of leadership principles that tested, over time, work and facilitate growth and business success. Below are the first five principles.

  1. Remember Occam’s Razor/KISS: Leaders should keep things as simple as possible and focus on relentless incrementalism. Growth comes via a learned set of behaviors that if properly simplified, and rewarded, become habits.  Likewise, it easier for the operational leaders to put into place, simple goals and objectives that forward the growth strategy.  I’ve watched so many strategic elements fail not due to a bad concept but due to too much complexity.  How do you eat an elephant?  One bite at a time!
  2. Measure what Matters: This ties to one above but it is a bit more nuanced.  Organizations talk about KPIs, etc. and throw out reams of data, often meaningless to growth.  I like a simple set of core metrics.  For example, care breaks down to only so many things that matter to the patient and the organization.  Outcomes are key.  Financials are relevant only such that the same paint the desired picture.  I like a focus on cash, especially in relationship to the expenses.  This is often called, ROI.
  3. Play a Long Game: Leaders should focus on a long view, one that embraces an ongoing picture of what growth and success looks like.  Short views frustrate management and staff.  The short stuff is about progress toward a longer, bigger picture.  Paint this picture, evangelize it, reward it and growth will occur.
  4. Create Succes via Humanness: In service organizations like healthcare, people are the capital.  They are the most precious commodity and a renewable resource.  Leaders build teams like coaches.  Treating people with respect, caring about them and for them, affords them the comfort and willingness to do great things.  I like what Steve Jobs said about doing great things in business: “Great things in business are never done by one person; they’re done by a team of people.”
  5. Create Constant Forward Momentum: Leaders are and always should be, ahead of any point in time.  They sell and exhibit a forward vision and work constantly, to keep momentum going forward (e.g., growth). A good leader looks to simplify, keep obstacles to progress minimalized, rewards activity and growth, recognizes performance, and when necessary, eliminates people that are barriers to the team and its accomplishments.

TGIF!. I’ll have more on leadership in future posts!

 

May 19, 2023 Posted by | Uncategorized | , , , , | Leave a comment

Health Care Leadership: Why its Hard, Why Many Fail and What it Takes to Succeed

The bulk of my work centers around gathering data, analyzing trends and working with the leadership of various organizations to implement strategy or more centered, strategies.  The process is iterative, interactive and always fascinating.  Throughout my career, I’ve worked within (virtually) every health care industry segment and seniors housing segment. I also counsel and have worked with entities that buy, sell, invest in, consult with, account for, finance, and research health care and seniors housing businesses. Its my work with the latter that is the genesis of this post and my decades of work with the former that is the “content”.

There are two fundamental reasons why health care leadership is hard and different from leadership duties in other industries: 24/7 demands and the immediacy of the customer to the enterprise.  Health care and seniors housing (regardless of the segment specific) never closes, has no true seasonality, and demand can increase and decrease with equal force and equal pace, almost entirely related to external factors and forces.  Pricing for the most part, other than seniors housing, is almost immaterial and unrelated to revenue.  No other, non-governmental, business is as regulated and scrutinized and mandated transparent than health care.  Likewise, no other business has the mandate that the full array and intensity of all services must be available 24/7, on immediate demand, with no ability to defer, fallow, or limit.  Even a 24 hour PDQ won’t have all services available constantly (if the hot dogs run out, they are gone!).

While other industries will have close customer contact, health care has a unique, and intimate relationship with its customers.  In SNFs, Assisted Living Facilities, Seniors Housing, etc. the customer is present for long-periods (years).  In hospitals, the customer is present for hours, days, up to weeks at a time (the latter rare unless we are talking LTAcH).  In the health care setting, the enterprise has total responsibility for all needs of the customer – great to small.  The quality of care and service to all needs matters and is measured, reported and today in many regards, tied to compensation. Back to the PDQ, the over-done hot dog costs the same and there is no governmental entity that maintains a hotline for customer reports and investigations regarding the quality of the hot dog.

In health care, there is a very unique and in many ways, perverted twist concerning the customer relationship.  The customer today is a Dr. Jekyll/Mr. Hyde manifestation.  No other industry has customers that are bifurcated as such – the payer being a consumer unique and separate from the actual present being.  Health care entities, to be successful, must satisfy both and manage the expectations of both, seamless and fluid to each party.  I know of no other industry where on any given day in a hospital for example, where it is likely that of 300 individual inpatients there are dozens more of the payer/insurer consumers requiring unique attention, simultaneously.  Miss a step, miss a form, etc. and the payer consumer refuses to pay for the human consumer that is receiving or received the care.

Because of the “constant” nature and customer relationships (coupled with many other reasons of course), health care leadership is hard.  It is hard because these two fundamental components are nearly, completely, out of the control of the leader.  The leader can only react or respond but truly, never change the paradigm or structure and always, in terms of the payer customer, sit beholding to the rule changing process and bureaucracy of the payer customer.  This last element can be unbelievably insidious.  For example, in the State of Kansas, dozens of SNFs face grave peril in terms of solvency because the State cannot efficiently certify eligibility for Medicaid for qualified seniors.  The delay has left dozens of facilities with Medicaid IOUs at six digits and climbing – the human customer receiving care, the paying customer bureaucratically inept and unwilling and incapable of paying its bills, and the SNF sitting with no real recourse.

Given the above, its frankly easy to see why so many leaders fail or simply, give up.  The deck is stacked toward failure.  On the expense side of the equation, because of mounting regulation, fewer elements are within a leader’s control.  With a rare exception, revenue is completely beyond control in terms of price and reimbursement for services provided.  With RAC and other audits, revenue initially earned can be retrospectively recast and denied.  (The PDQ six month’s later decides to recoup payment for the hot dog because, in its infinite wisdom, you didn’t need to the eat the hot dog or you should have made a wiser food choice).  The overwhelming variables that can contribute to failure in a micro and macro sense for a leader are not lessening.  His/her organization is open and under scrutiny, 24/7.  He/she must oversee and be accountable for the health outcomes of a human customer that in turn are interpreted by the payer customer (remotely), subject to alteration, and retroactive scrutiny.  Today, success isn’t just based on what occurred at the point of service but after the service concluded.  The enterprise is at-risk for human behavior (compliance and non-compliance) of the consumer for not just days post service but months.  Further, the enterprise is at-risk for the satisfaction of a consumer whose behavior and lifestyle may have significantly contributed to his/her need for care and service initially.  As one executive told me recently; “We have to tell people the truth about their disease, figure out how to make it sound good and nice, and hope that we have done so in such a life affirming fashion that the patient will give us 5 stars for service.  Figure that one out”.  Alas, perhaps failure is inevitable.

Aside from failure correlating to burn out or shear “giving up” (the average large system executive tenure is less than 10 years), the failure in leadership that I see resides primarily in two areas.  The first is an inability or lack of willingness to realize that the paradigm is constantly changing today and the pace of which, is accelerating.  It is human nature to seek equilibrium; to pursue elements of stasis and calm. The same ( is) anathema to leading a health care enterprise.  The second area is aversion to risk.  Precisely because of the first point, taking risk or being capable of tolerating large elements of risk is imperative today in health care.  The best leaders are true entrepreneurs today.  They see opportunity and are willing to pursue it with vigor.  They find the niches and pursue them.  Every bureaucracy and rapidly changing industry paradigm begets opportunity with equal pace and ferocity.  For example, the growing “private, non-reimbursed” service sectors in health care that continue to grow and flourish because of and in-spite of the heavily regulated, price tied market.  I know of and have consulted for, provider groups that have moved further away from Medicare and managed care to private payment with phenomenal success.  Was the strategy a risk?  Yes.  Most would not take this type of risk.  I am harkened however by the notion that at times, the greatest risk present is the risk of doing nothing.

Successful leadership and leaders today, those that I know, have the ability to think systematically and algebraically – to solve the industry polynomials with all of the variables.  They are inquisitive by nature and unwilling to accept the status quo, regardless of where and why.  They embrace the famed Pasteur quote: “Chance (luck) favors the prepared mind”.  They also have the soul and panache (tempered) of Capt. Jack Sparrow (from Pirates of the Caribbean).  They like risk and have the entrepreneurial heart and mind to innovate and move fluidly through problems and challenges such that the same are opportunities.  They don’t allow their enterprises to become complacent or bureaucratic.

Today, success is about better – better products, better service, and better care.  Payers are demanding accountability and want an increasing level of care and service for lower levels of payment.  That is the paradigm and it is moving to higher levels of accountability and lower levels of overall payment.  The best execs know this and don’t quibble with it (much).  They realize that success if about adapting the enterprise accordingly while finding the pliable spots that such an environment creates.  These spots are service lines, system enhancements, productivity improvements, and different levels of patient engagement.  Similarly, they realize the risk limits of concentration – too much exposure to certain payers.  They have seen this trend coming and have already moved.  For those still trying to reverse or slow the trend, this is where failure first begins ( the search for stasis in a rapidly changing world).

 

April 1, 2016 Posted by | Assisted Living, Home Health, Hospice, Senior Housing, Skilled Nursing | , , , , , , , , | Comments Off on Health Care Leadership: Why its Hard, Why Many Fail and What it Takes to Succeed