Wednesday, December 28, 2016

By the Book

While it has been too many years to count since I have been in school, I believe that I am on a path of continuous and life-long learning. Every day I learn from members of my team, other folks in the industry, friends and family. And while I am starting to get into listening to podcasts and enjoying favorite blogs and online publications that I review, books remain a key source of both pleasure and instruction.

Over the years, I have found many books on leadership and management instrumental in helping me solve problems, formulate strategies and think of new ways to approach my work. There are some books that I read once and apply what I have learned and others that I return to each year and read over and over again.

As the holidays draw near and you find yourself with a bit of extra downtime, try picking up a book from which you can learn a bit more about leadership and management applications. Here are some of my favorites:

  • The Art of War by Sun Tzu - This is a book that I return to year after year. Just as some people have a favorite movie that they enjoy countless times, for me, The Art of War fills that space. Over the holiday season, when you have an afternoon with no other obligations, I encourage you to visit or revisit this classic. Two key leadership nuggets of the book for me are its lessons about the need for speed—reducing the time it takes to make decisions, developing new lines of service and responding to the customer—and the importance of personal accountability—expecting it in yourself and demanding it of others.
  • Jack: Straight from the Gut by Jack Welch - There are few business leaders who provide more no nonsense and insightful business and leadership advice than former GE Chairman Jack Welch. In the name of transparency, Jack is a friend of mine and a friend of the hospital, but I was a fan of Jack and his books long before I first met him. Of all Jack’s books, this one remains my favorite as it combines the fascinating story of his rise through GE with business successes and failures and lessons on the importance of striving for excellence. It is also as funny and candid as Jack is in person.
And so I hope you have a joyous and restful holiday season and are able to enjoy some quiet time with a good book. I am looking forward to doing just that.

Wednesday, December 21, 2016

Grow the Core

As I mentioned in a previous post a couple of weeks ago, I recently spent an invaluable day at the corporate headquarters of American Express in New York along with key members of my marketing team. As we discussed the practice of consumerism and marketing our services directly to consumers, the folks at American Express reiterated the importance of focusing first, and foremost, on one’s core customer.

During that conversation, I was reminded of cautionary tale about Gatorade, the leading sports drink manufacturer, and what happened when they strayed away from their core customer. Since its inception in 1965 when it was first formulated as replenishment beverages for the University of Florida football team and for years that followed, Gatorade’s core customer was the “athlete” looking to energize pre-workout or recover after a game or training session.

In 2001, PespsiCo acquired Gatorade and Coca-Cola, in an attempt to compete for a share of the sports drink market, created Powerade. As a result, the two companies engaged in a price war, along with over 1,400 other brands of noncarbonated beverages. Gatorade saw short term benefits, due to their discounted prices, but it wasn’t long before they started realizing their loss in brand strength.

The result was a decrease in market share as their new customers proved to be elusive and the core athlete started to leave in pursuit of other sports drinks. Gatorade has since recovered by refocusing its brand and marketing its sports drink lines to appeal to athletes of all different levels from the high school student to the marathoner. They invested in innovation, differentiating their core products, and expanding their footprint globally. Their focus was now on defining the sports drink category rather than being reactive and playing defense.

The reality is that in most for-profit businesses, core customers are responsible for the largest percentage of a company’s revenue. Subscribing to the Pareto Principle, some would even say that 80 percent of revenue is generated by 20 percent of customers. Core customers are also more likely to be in it for the long haul and will be the most forgiving when external forces hit. As they like to say at American Express, we should be “growing the core, then adding more.”

At Jupiter Medical Center, we have developed a continuum of care that is completely patient centered. Everything from outpatient ambulatory services, through acute care to a post acute environment, the continuum is designed to support the medical needs from birth to end-of-life care. As our continuum of care expands and the market shifts, there is a greater need to refocus on the idea of our core customer. Historically, our core has been the critically ill. We have been taking care of and marketing to this consumer segment for years. But as we move towards a health and wellness platform, we need to ask ourselves – is our core customer changing? Or perhaps, consider the idea that we may have more than one core customer? Asking these questions and having these conversations will become crucial if we are to remain successful.

Tuesday, December 13, 2016

Ground Control

With the passing of astronaut and American hero John Glenn last week, I was reminded of his famous quote, As I hurtled through space, one thought kept crossing my mind - every part of this rocket was supplied by the lowest bidder. Thankfully, in Glenn’s case the lowest bidders in 1962 made quality machinery that helped to transform our world.

In my industry, the debate over cost versus quality rages on, especially in light of a recent government regulation which changed the fee structure for services rendered at off site facilities. In a nutshell, hospitals are now paid less for ambulatory services like an imaging test that we conduct at facilities located off of our main campus. This change will make it difficult for health systems to recoup capital or operational costs.

The reality is that in this new world order, providers like Jupiter Medical Center cannot be paid less and continue to spend the same amount on the equipment we need to provide world-class quality care. Currently, original equipment manufacturers (OEMs) - those who make the machines and medical devices we need - operate on profit margins of anywhere from 12 to 18 percent. And, this does not even include the significant money they make on service contracts with hospitals.

So how do we move forward to create a sustainable business model for our industry? For each channel of our business (imaging, oncology, etc), we have to rewire the way we approach both the costs and the fees for services. 

One approach is to work our way backwards from the point of service. With imaging, for example, we would look at the costs the provider incurs and the fees they are able to secure.  We then need to move through the chain all the way back to the OEMs and work to get agreement to set a price that is fair for everyone.

This will only work, however, if we come together as a group. By that I mean, as providers we need get together and have honest conversations about what we are all charged, our profit margins and our fees and then, in turn, have those conversations with all those responsible for providing service or equipment. This will ultimately allow us to find a way to continue to maintain quality while keeping costs in check.

I am not na├»ve and I realize that this change is not going to happen quickly. There is an old saying “it takes a long time for a giant to die.” This is about what our industry will look like 20 years from now. Change is hard and it takes a great deal of time, effort, innovation and people willing to do the work. We have to realize that the way we currently operate is simply not sustainable and like John Glenn, we have to explore new ways to see our world.