A model for re-focusing on the value stream through your existing resource pool.
While the world is busy bending the curve in the fight against the COVID-19 pandemic, healthcare is busy bending a curve of their own – the cost curve – as businesses fight for survival.
As a result of healthcare organizations pushing back procedures, patients staying home, and office visits delayed, many healthcare providers are now reeling financially. Many are looking at ways to reduce expenditures, and as such, looking to cut idle capacity.
Healthcare providers may be tempted to cut costs through the reduction of human capital without considering the long-term impact. Using the traditional/linear cost and revenue curves (Graph 2, when a company pursues layoffs as an immediate response to the sudden and unforeseen reduction in revenue, they may be able to stifle the effects for the short term but at the cost of maximizing capacity for the long term, when the market bounces back.
What then should a healthcare provider do?
First, pause, and take a deep breath before acting. Look at the longer term view to see how to get the best long term value instead of destroying your capacity for delivering value in exchange for immediate savings.
Capacity should be viewed as value-generating potential. Instead of destroying a key conduit needed to deliver value to your customers, figure out how to focus your capacity (people) on the existing value stream during these times of disruption.
The following model outlines how re-focusing on the value stream through your existing resource pool (aka capacity) will enable a sharper and quicker rebound in the revenue, which we’ve seen historically
This is easier said than done when you’ve had to close your doors, seen your patients and care plans impacted, watched as your staff and facilities sat idle, or felt deep uncertainty about when normal healthcare operations will resume. However, there are still ways you can adjust your revenue and cost curves:
These tactics focus on approaching the disruption in a way so that when demand picks back up, you haven’t lost the opportunity to position your health system to differentiate and take advantage of the situation.
While today’s challenges have never been greater, providers are capable of not only surviving but also thriving during these challenging times. It means being willing to resist temptations to cut expenses by repurposing capacity in a way that will prepare your organization for the future.