No Mission, No Margin

Most hospitals today are still “not-for-profit,” that is they are charitable organizations exempt from federal income taxes under IRS Sec 501(c)(3). As we like to remind everyone from time to time, the term “not-for-profit,” or “nonprofit,” is not a mission statement; it pertains to the IRS tax code description for tax exemption. Most employees know, with varying degrees of acknowledgement or acceptance, that unless their organization makes a profit, the hospital or system cannot be competitive and fully implement its longer term strategies. But expectedly employees will ask, “how much profit is necessary, especially if we are constantly being asked to do more with less? What is this profit used for if not for for meaningful raises and needed equipment? How can I possibly make a difference in generating a profit, since my department is so small and dependent on everyone else doing their jobs?”

To answer these questions, build trust and gain alignment, organizations need to be transparent with financial information. Showing the financial information is not sufficient; teaching your organization how finances work, how the organization makes and spends money is so fundamental to building trust and collaboration in your organization. Management needs to clearly articulate the organization mission, vision and values as this provides guidance to the organization for ideals, behavior and decision making. Mission, vision and values needs to be embodied in the organization’s five year plan, and as many people as possible in the organization need to participate in and contribute to the development of the strategic plan. When people can see themselves in the strategic vision, or the invented future, they are more likely to embrace it and earnestly work on implementing the plans of change. True ownership thinking also means owning the future, and all the work necessary to get there. Moreover, employees are the true “operational experts,” often knowing where process and system breakdowns occur and able to identify opportunities for improvement. If you listen carefully, you are likely to hear about their constraints in doing “the right thing,” whether real or perceived. By giving your employees the right information and tools, you can unlock many process improvement opportunities that will result in improved patient care and profitability.

To ensure achieving the long term operational and financial objectives laid out in the strategic plan, actions need to be taken today. Although we get a sense of action in development of the organizational annual goals, operating plans and budgets, the detailed action steps must be developed and owned by the departmental managers. These actions are usually detailed in the departmental plans and budgets where individuals can be held accountable. The true work of any organizational turnaround actually happens in the trenches; work performed everyday by the front-line staff and managers. The high level organizational goals must be translated to be meaningful to the individual departments actually doing the work. Goals related to the budget, quality, safety, patient satisfaction, growth – all must be made relevant to the unit managers, how it pertains to what they do, and they must understand how their actions will impact results. All employees can and should be engaged in developing rapid improvement plans, complete with financial targets and key performance indicators that might be unique and meaningful to managing the unit.