Being Proactive in the Face of Uncertainty

While none of the Policy Pub’s guests have provided any comments yet (I’m hoping a few more “spirited” posts will begin to wear down the  contributory inhibitions), several patrons have emailed me privately and asked whether I had any practical advice on how to approach this period of policy limbo – between before knowing how SCOTUS will decide and the outcome of the fall general election.  So I thought this might be a good opportunity to offer some advice.

Accept the Brutal Reality
Often lost in the din of popular media reporting on the Healthcare Reform debate are the irrefutable realities that underlie how and why it has become a major public policy issue in the first place.  The Internet is replete with charts and tables illustrating the debated evidence of unsustainable healthcare spending.  I think a very poignant and candid assessment that ought to resonate with business-minded individuals can be found in the January 2012 Standard & Poor’s credit report, Mounting Medical Care Spending Could Be Harmful To The G-20’s Credit Health.  It was noted there that, “steadily rising health care spending will pull heavily on public purse strings in the coming decades. If governments do not change their social protection systems, they will likely become unsustainable, in Standard & Poor’s Ratings Services’ view.”

The will to control healthcare spending is not a Republican or Democrat phenomenon.  So holding out hope that future policy outcomes directed at the behest of either current or future elected officials, irrespective of political party, will somehow relieve the pressure is a fantasyland belief that only serves to psychologically forestall the inevitable.  Healthcare organizations that are able to accept and internalize knowing that they will have to compete on value in the future will survive – those that do not, will not.  It is really as simple (and brutal) as that.

Use this Time to Answer Some Tough Questions
If the Affordable Care Act is either partially or fully struck down – and/or the general election delivers a major shift in party majority, there will be a brand new tsunami of political opportunism in its wake.  It will take a fair amount of time (I am betting six quarters, at least) for that special interest flooding to subside to the point where any type of meaningful legislation can be passed replacing the ACA.

What impact that actually has, however, on the timing of the policy-driven financial realties that senior housing and care providers are facing is unclear because much of the ACA’s impact is not scheduled to begin until 2014 in any event.  And while we wait for the Federal government, State budgetary pressures will continue to mount.  So I think a prudent approach is not to mark the passing of time by the political winds but assume that every month going forward should reflect a quantifiable movement toward a future state vision of your organization that is more lean, more efficient – and is able to deliver more value than your competition.

To accomplish this, however, you first need to decide what that future state vision looks like.  I just finished a new whitepaper on strategic planning and positioning that discusses the importance of visioning in context.  For the purposes of this post, I think the relevant questions that need to be answered by most organizations – and very soon – are:
     What business(es) are we in?
     Who really are our constituents and stakeholders –
        and how do we bring value to them?
     Are we ready to partner with other healthcare 
        providers – and under what circumstances?
     How do we ensure that our investments create
         future option value?
     Where are the opportunities to monetize our value
        chain into revenue?

Be Ready to Negotiate
If there was one skillset I would say – on average – represents the weakest link for high quality, high value senior housing and care organizations desiring to thrive in a future world of Healthcare Reform it would be the ability to negotiate business deals.  It is just not an inherent skill that seems to be well correlated with other leadership qualities that are of paramount importance – and have historically been sufficient to achieve leadership excellence.

That is changing, and quickly.  Effective negotiation will determine whether you are  “bought by” or “merged into” another organization.  It will determine whether the acquisition you make increases or decreases the overall value of the combined organizations.  It will determine whether you drive the terms and conditions necessary to financially survive under managed care, or accept what you’re given – and hope for the best.

When the time comes to partner with other market participants (whether those are community-based organizations, physician groups operating as a medical home or  hospitals) you don’t want to be sitting there with your hand up, saying, “oh pick me, pick me!” You want to know well in advance what you bring to the table, what it is worth and what you demand for that value.

Create an Opportunity Assessment Matrix
Finally, senior housing and care organizations will have to be able to react more quickly to opportunities than they have in the past.  As Healthcare Reform – in whatever final format that takes – begins to roll forward in earnest, market dynamics will accelerate.  New – and often unexpected – partnership opportunities will emerge.  Being able to react quickly – and before the competition – will be a huge strategic advantage and key to survival.

One idea that we have found helpful is the Opportunity Assessment Matrix.  This is a concept that we have used with several senior housing and care organizations, and it is a tool that is designed to streamline the process of identifying, assessing, analyzing and prioritizing market opportunities.  It is also helpful in mitigating risks and ensuring the requisite organizational support is in place before valuable resources are invested in pursuit of alternative opportunities.

The concept is basic: discuss, agree upon and document the various elements that any potential opportunity must possess to merit consideration.  Determine the relative weights of those elements in the context of the organization’s business strategy.  And then create a consistent methodology for who and how the individuals responsible for assessing the opportunity will be engaged.

Hope this is helpful . . .
  ~ Sparky