HFMA VIEWS

Casey Nolan
Navigant Consulting Inc.

In a recent meeting with a group of COOs and CFOs, I asked the following question: “If you had to cut 10% out of your operating budget tomorrow, what would you cut?”  The group very quickly began making suggestions, and in a matter of minutes they had generated a list of more than thirty specific cost reduction ideas. I then asked them another question: “If you had to grow your top line profitably by 10% in the next year, what would you grow and how would you grow it?” The group struggled to come up with even a modest list of suggestions. This brief exercise demonstrated the fact that most healthcare organizations have a far better understanding of—and clearer accountabilities for—the cost side of their business than they do for profitable growth. In today’s healthcare environment, however, achieving profitable growth represents a critical success factor for virtually every organization. Yet very few healthcare providers have developed the capabilities and competencies necessary to drive profitable growth. And even fewer have structured their organizations to create the same degree of accountability and discipline around growth as they have around cost management. So as you head home tonight, I suspect you know very well who is in charge of your cost management agenda. But I also suspect that there isn’t a counterpart for profitable growth, which is a problem, because very few organizations can shrink their way to success.