The piece about the financial problems facing the executive teams of specialty provider organizations in the field (see The Sound Of Closing Doors) brought many interesting insights from my colleagues and our readers. My colleague Ken Carr sent me a message:
“I talked with a couple of providers this week who said that they were positioned for the current crisis so far, but that an extended recovery will be a challenge. It concerned me to see the number of organizations that don’t think that they will survive. I think that a shift in mindset is important—small organizations that lack scale can continue to enable their leadership and staff to have impact even if they pursue some form of collaboration, merger, or pursue being acquired.”
My question for Ken—“What is the change in mindset that execs need to adopt and how is ‘change in mindset’ different from ‘wishful thinking?’”
His response—“The change in mindset is related to identifying emotional perceptions and priorities that equate mission effectiveness with current organizational structure and identity, and branding that organizational strength, sustainability, and growth. Most board members, staff, and donors affiliate with a non-profit organization because of mission, however, they begin to combine the mission and brand of the organization as one. Innovative leaders can see that the mission can be enhanced by altering the organizational structure, and sometimes even the name and brand. Brand identity and organizational history are important, but they can’t be allowed to become a barrier to creating a new structure with greater opportunities.”
But it is difficult to think differently—to be creative and daring—at a time of great peril. OPEN MINDS Senior Associate Ray Wolfe commented, “It’s in our DNA to think about what we are doing now or have done in the past, and how we have done it.” That traditional mindset does not ensure sustainability or success in a time of revenue declines, budget cuts, and recession in the foreseeable future. As Mr. Wolfe pointed out during our recent web briefing, Revenue Maximization During Times Of Disruption – Building Top Line To Sustain Margins – An Overview, health and human service executives need more of a “revenue maximization” mindset. This perspective was reiterated during a recent conversation with David Guth, chief executive officer of Centerstone—his perspective is that leaders need to “lean into the future and imagine what is possible in the new normal.”
So, what are some practical ways to lean into the future and pivot to a new leadership mindset? Mr. Wolfe and Mr. Guth offered some pointers and lessons learned.
Develop new operational and business models—Executives of provider organizations need to start by enhancing the efficiency, effectiveness, and consumer experience of their current processes. This can be applied to the fundamentals of how services are delivered, or to specific parts of the operation. Centerstone is using the current COVID-19 crisis as a period of optimization and redesign of how and where services are delivered. “We are doing more and doing it differently because we need to stabilize and move forward quickly,” said Mr. Guth. They moved 3,500 staff to work from home during the week of March 16th and now they are focused on how to enhance virtual operations and keep employees engaged through a strong internal communications plan, because “work from home” may be the future for many staff.
Instead of lamenting the shorter visits and lower reimbursement that telehealth entails, executives and clinical professionals at Centerstone see it as an opportunity to increase efficiency and productivity and “provide the right care at the lowest cost,” to meet consumer and payer expectations in the long run. While fee-for-service revenues fell to 57% of normal levels in the first week of the crisis, they are up to 85% of revenue now. The Centerstone team started to reach out to high-risk consumers to encourage virtual visits and catch up on missed appointments early in the crisis. And, with a robust social media outreach strategy, including online public information meetings, Centerstone has become more connected to the communities it serves during the crisis. They expect the increased awareness will serve them well as trends in where and how people seek health care—whether primary or specialty care—evolve in the post-crisis new normal.
And, moving their traditional services to virtual is only the first step. Mr. Guth says his organization will continue its significant investment in technology, knowing that it gives them flexibility to operate from anywhere and extend services anywhere. And their innovation arm, the Centerstone Research Institute, is designing new models of care to be delivered virtually and “cutting down on the time it takes to develop new types of care.”
Seek new dynamics in old relationships—Don’t be afraid to negotiate with payers and health plans right now, advises Mr. Wolfe. Now is the time to ask for higher rates, new service contracts, value-based payments, pre-payment, and other enhanced contract terms. But, this can’t happen if executive teams don’t know their numbers, including consumer demographics, performance data, unit, and case costs, as well as how they stack up to competitive options (see Driving Without A Dashboard? You’ll Be Running On Empty Soon).
Mr. Wolfe shared tips on negotiating with payers. Provider organization executives should communicate their understanding of payer and health plan “pain point populations.” It is important to communicate organizational strengths and effectiveness, and how specific programs are reducing health system costs. And don’t forget perception. In those discussions, emphasize brand footprint in the community. Think about expanding the relationship to a partnership.
Respond to new consumer preferences and new competitors—However the crisis phase of the pandemic resolves itself, the health and human service landscape will be altered. Consumers have had the chance to use virtual care. Fear of facility-based care and long-term living may drive more in-home services. Models for service delivery in facilities—whether outpatient or residential—will need to change. And, in the midst of these emerging changes, new competitors are launching a wide array of new competitive services (see The Amazons Of Health Care).
Mr. Guth noted that “There is more opportunity and more competition in telehealth than ever before. If we don’t jump on it, others will.” While the leadership and board of Centerstone have been looking at opportunities in telehealth for a while, the COVID-19 response has accelerated their plans for expansion across geographic boundaries. As part of these expansion plans, Centerstone is collecting feedback from consumers after every visit in order to understand the evolving market preferences. In addition to learning more about preferences for telehealth, the consumer data is helping them “figure out community solutions” for those who cannot take full advantage of virtual care (see Telehealth—Not For Everyone). For example, the organization is considering in-home visits as an option for 1,500 consumers on injectable medications and making plans to enhance capabilities for emergency services. “We are thinking about other virtual services like asynchronous opportunities for consumers to connect with clinical professionals, and also about what technologies we can provide to people at home to increase the effectiveness of virtual care,” explains Mr. Guth.
Now is the time for strategic planning and innovation—on steroids. The basics, like portfolio analysis, performance metrics, a payer playbook, and competitor benchmarking, are the essential building blocks. But the cadence is far different. Executive teams need to revisit planning assumptions routinely, keep regular tabs on payers and competitors, have a streamlined process for taking new service line concepts from idea to scale, and be prepared to fail (and pivot) fast. These are not times for the faint of heart. I am reminded of the words of John F. Kennedy, “The Chinese use two brush strokes to write the word ‘crisis.’ One brush stroke stands for danger; the other for opportunity. In a crisis, be aware of the danger—but recognize the opportunity.”
For more on developing a new leadership mindset, check out these resources in The OPEN MINDS Industry Library:
- Finding Opportunity In Adversity: Leadership Lessons From The COVID-19 Crisis
- Can We Learn From This? 12 Steps For Leaders To Manage Beyond The Crisis
- The Big Questions For Leading Through This Crisis Period
- Prioritizing Innovation: It’s About Discipline & Thinking Creatively To Solve Challenges
- ‘Productizing’ Services For Competitive Success
- The Three New Rules For Innovation
- Making Innovation Work—Think Past, Present, Future
- The Most Common Program Innovations Among Specialty Provider Organizations
- How Do Medicaid Directors Think About Quality, Budgets & Innovation?
- Innovation Success In Three Steps
On a related topic, register for our upcoming web briefings in our Executive Blueprint For Crisis Management series:
- July 2: Executive Portfolio Management In Time Of A Market Shift – What Programs To Keep & Which To Close?
- August 6: Getting Paid – More – For What You Do – Tactical Approaches Of Increasing Fees & Rates From Payers & Moving To New Reimbursement Models With Payers
- August 13: Planning For Revenue Expansion By Expanding Your Service Area – From Market Analysis To Launch
And for a much-needed leadership experience with your team, also mark your calendar for The 2020 OPEN MINDS Executive Leadership Retreat, including our opening keynote on September 15, “How Ike Led” by Susan Eisenhower, Chief Executive Officer & Chairman, The Eisenhower Group, Inc. (EGI).