Three “Brutal Facts” That Provide Strategic Direction for Healthcare Delivery Systems: Preparing for the End of the Healthcare Bubble

Abstract

I n August 2005, David Lereah, then chief economist of the National Association of REALTORS, stated, “All of the doom-and-gloom forecasts of a housing debacle are not only irresponsible, but downright wrong” (Shilling 2010). Lereah was not alone; economists from Goldman Sachs, the National Association of Home Builders, and the Mortgage Bankers Association all expressed similar opinions. Wall Street firms such as Lehman Brothers and Bear Stearns bet their companies on the strength of the housing market. Eventually the lack of financial sustainability inherent in subprime mortgages burst the housing bubble and the industry collapsed. The lack of acceptance of the housing bubble by industry leaders is a clear case of cognitive dissonance, in which “the more we are committed to believe something is true, the less likely we are to believe its opposite is true, even in the face of clear evidence that shows that we are wrong” (Goldsmith 2011). Refusal to recognize new market realities is a fundamental strategic flaw that has led to the demise of many organizations. As Admiral James Stockdale noted in his discussion with Jim Collins (Collins 2001, 85):