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Sep-24, 2009
Over the past 18 months, the United States financial system has gone through an almost unprecedented period of volatility created by three major forces. First came the economic recession and the contraction of many economic fundamentals reflected in four consecutive quarters (3Q08 through 2Q09) of flat or negative GDP growth rates. Second came financial market turmoil, including the implosion of the external debt and equity markets (recall auction rate securities market and Dow 6500) resulting in severe consolidation within the financial services sector. Third, with the election of a new Presidential agenda came uncertainty created by the portent of healthcare reform.
The convergence of these three factors is frequently referred to as the "perfect storm" - an apt if not somewhat overused metaphor adapted from Sebastian Junger's 1997 novel of the same name.
I find three things to be of interest about the parallel between Junger's book and navigating the current healthcare industry environment.
First, for those who have read this book, you may recall that the ill-fated Andrea Gail was not the only member of the swordfish fleet out in the North Atlantic in October, 1991. There were other vessels who were tracking the same meteorological conditions and managed to return to port safely. What is intriguing to consider is those decisions other vessels made that allowed them to survive and fish another day. What tactics and maneuvers did they make that evening instead of hunkering down and trying to riding it out as did the Andrea Gail? What sorts of short-term costs did they absorb in order to position themselves for a safe return to port? How did they evaluate risk differently than their fleet colleagues and competitors?
Second, the suggestion of a "perfect storm" has the underlying connotation that there is nothing one can do, conditions are beyond your control, and that the outcomes are a fait a complis. This is why when reading about "storms", the term "victim" is not often far behind. I would suggest that the other members of the fleet ship that evening made moves that prevented them from becoming a victim. In today's economic climate, it begs the question what decisions are being made in health system boardrooms today that will prevent them from becoming a victim tomorrow.
Finally, riding out a storm, or an economic cycle for that matter, in hopes that the weather will turn is a passive strategy that can have ill-fated consequences. Cycles, like storms, have durations that are often hard to predict. Whether it be navigating an ocean or an industry in turmoil, short-term tactical moves that allow for self-preservation (ie liquidity), combined with prudent repositioning (ie ambulatory growth) should allow health systems to go on the offense while the storm cloud begin to recede. | |  Mike Lincoln
EVP Marketing and
Business Development
312 676 4777
michael.lincoln@lillibridge.com Tags: ambulatory growth,
Andrea Gail, auction rate
securities, debt and equity
markets, economic recession,
financial turmoil, GDP, healthcare,
liquidity, perfect storm, reform,
risk, victim, volatility. |
