How to Turn Around a (F)ailing Hospital or Health System

Abstract

Hospital and health system bankruptcies and closures continue to rise in the United States. Turnarounds of healthcare organizations at risk or already in insolvency present daunting challenges that require new leadership. There are at least four key components necessary for a successful turnaround: (1) unwavering support of the governing board and key stakeholders for the new management team; (2) the right timing to start the turnaround process; (3) appointment of a transformational Chief Executive Officer (CEO) who epitomizes the modified democratic management model; the new leader should preferentially hold dual MD and MHA/MBA degrees to understand both medicine, the core business, and economics, the other nucleus for the organization’s survival; (4) a convincing and inspiring strategy that is based on both financial and operational data and includes elements of the blue and red ocean strategies to accomplish a successful turnaround. From the financial perspective, cash management, expense reduction, and revenue improvement plans must be developed and executed immediately. From the workforce perspective, the new CEO must, from the very beginning, provide regular, honest, and uplifting communication messages to turn internal skepticism to belief and to motivate and inspire all employees. Lastly, to guarantee the sustainability of a successful turnaround, all strategic measures must be re-evaluated on a regular basis with a low threshold to adapt to new changes in order to stay ahead of the competition