By Kathy McGrath, President, KR Consulting Corp.

November 2023 – Benjamin Franklin has often been attributed as saying, “When you are finished changing, you’re finished.“

Never has that been truer than the past few years in the healthcare industry. Contributing factors include changing CMS regulations, the advancement of AI, increased adoption of telehealth modalities, ongoing staffing shortages, continuing merger and acquisition activity, and a tightening of investment capital. These are challenging times requiring great vision, strategy, innovation, and effectiveness.

Consider these indicators. As start-ups compete for investment capital, the first 2 quarters of 2023 have seen fewer investments and smaller deal sizes for the digital health market.  (Landi, Health, 2023) Gibbins Advisors, a leading restructuring firm, reported in July of 2023 that healthcare bankruptcy filings rose significantly in the first half of the year with 40 Chapter 11 filings. If this rate continues through the end of the year, the market will see a 74% increase over 2022.  (Gaivin, 2023)

The landscape is changing on all fronts and the healthcare sector must be willing to adapt to survive. Sai Balasubramini, MD JD wrote in Forbes earlier this year, “…the focus on innovation has never been higher, as companies continue to invest billions of dollars in digital health tools, virtual health services and new modalities of healthcare delivery— all in an attempt to increase their market share and disrupt a historically unchanged market while also providing value to patients. … to succeed in healthcare, organizations must remain nimble, continue to innovate rapidly, and most importantly, pivot to changing market and patient needs.” (Balasubramini, 2023)

Unfortunately, many organizations treat innovation as a special project or temporary initiative that leaders execute only when necessary. A commonly quoted change metric is that 70% of change initiatives fail.  Although that metric has been disputed, it is widely accepted that change initiatives are frequently not successful in the long-term.  According to John P Kotter, “…change sticks when it becomes ‘the way we do things around here.’” (Kotter, 1995)

In today’s environment we must stop thinking of change management as a temporary project implemented in response to a crisis or significant opportunity. The most successful organizations will be those who develop the culture, skills, and ability to evolve and who make innovation and process improvement a core competency. Companies must foster recurrent change and be willing to commit funds, staff, and time to embrace change as part of their DNA. Leadership must consistently lead by example, creating a culture of trust, transparency, and communication that engages staff in the future of the organization. Managers must give staff an opportunity to participate in process improvement and learn the skills and metrics required BEFORE seismic shifts are needed.

There are many models of change management, but most agree that a critical element is a culture of trust, communication, and respect. This cannot be an afterthought when significant change is needed. We develop a culture of trust over time and consistent reinforcement. Staff develop respect and loyalty to their leaders when they see the company’s core values and ethics consistently represented in everyday decision making and operations. Open communication means sharing the ups and downs of business and being transparent and vulnerable when possible. It also means being willing to accept honest, constructive feedback without fear of retaliation or humiliation. Sam Palmisano, CEO of IBM from 2002 – 2012, advocated for building a workforce of relentless change agents through value-based management, inspiring people to a common purpose and set of values. (Hemp & Stewart, 2004)

Another consistent element of a change management culture is employee engagement. Do your employees understand the business model, the organization’s vision, and goals? Do they know how their role contributes to the company’s success?  Furthermore, do they believe in the strategy and vision for the future? In general, people are more engaged and cooperative when they feel valued and heard. They will be more receptive if they understand the organization’s vision, what is being asked of them, and why. If employees do not feel understood or appreciated, they are more suspicious and resistant, leading to change fatigue and burnout because they feel taken for granted. Furthermore, when employees are engaged in a challenge or opportunity, they are likely to have ideas and suggestions that managers might not have thought of themselves. They will be more willing to try new things and the results will be better, if leadership includes their input and feedback.

As in most things, practice makes perfect. To develop a change mindset and core competency, managers must provide opportunities for staff to participate in process improvement or product management initiatives. A Kaizen session is a great way to empower front-line employees and cross-functional stakeholders in a short-term performance improvement exercise. An effective Kaizen session is usually only a few days and can deliver meaningful results. It also builds critical thinking skills, a culture of quality assurance, and teamwork.

Another key tactic is to invest in the development of the staff by providing training on the business model, the market, and key metrics. Later when there are bigger opportunities, everyone understands the process, shares better ideas, and is more receptive to changes.

And finally, a strong change leader can help an organization scale and grow more quickly by being a champion of efficiency, process improvement, service excellence, and new product development. This person builds collaboration across the business, understands the interdependencies of the operation and the market, and displays strong leadership skills. As a key member of the leadership team, this person fosters the culture, communication, and values of the organization.

Planning and practice are invaluable.  As Abraham Lincoln once said, “I will prepare and someday my chance will come.”

About the Author

Kathy McGrath has 15+ years of healthcare experience in member and customer operations working at a Fortune 50 corporation as well as fast-paced start-up. She is currently President of KR Consulting Corp providing consulting services and hands-on deliverables to health and wellness companies.

Before starting her own consulting firm, Kathy led and scaled the Live Services team at Transcarent, delivering a personalized care coordination and health coaching service. She created standardized workflows, developed KPIs, updated infrastructure and reporting, and aligned the compensation and staffing model.  Kathy and her team improved efficiency, reduced costs, and maintained a member NPS of 85+ year over year.

Kathy began her healthcare career working at McKesson Health Solutions for 15 years as the VP Customer Operations. Her Client Success, Professional Services and Program Outcomes teams were accountable for implementations, program value, contract compliance, outcomes, and client satisfaction.

Kathy resides near Denver, CO and would love to talk with you about how she can best help your organization build and scale a team, improve efficiency, retain and grow your current client base, and track your key business metrics.

References

Balasubramini, Sai. (2023, August 7). Healthcare Sector Bankruptcies Are On The Rise. Forbes. Healthcare Sector Bankruptcies Are On The Rise (forbes.com).

Gaivin, Kathleen Steele. (2023, July 25). Healthcare bankruptcy filings set to triple. Business Daily News, Healthcare bankruptcy filings set to triple (mcknightsseniorliving.com).

Hemp, Paul & Stewart, Thomas. (2004, December). Leading Change When Business Is Good, an Interview with Samuel J. Palmisano. Harvard Business Review. Leading Change When Business Is Good (hbr.org)

Kotter, John. (1995, May-June).  Leading Change, Why Transformation Efforts Fail. Harvard Business Review. Leading Change: Why Transformation Efforts Fail (hbr.org)

Landi, Heather, 2023, July 11). Digital health funding settles down in 2023 with fewer deals, lower check sizes. Fierce Healthcare, Digital Health.  Digital health enters ‘new normal’ with $2.5B raised in Q2 (fiercehealthcare.com).