Naked reverse: unexpected plays for exceptional results - Management - physicians' investments

Physician Executive, Sept-Oct, 2003 by Edward J. O'Connor, C. Marlena Fiol, Gerry Dewil

Dr. Schmidt was worried. A few days ago his professional future seemed promising. Several of his colleagues had approached him with an invitation to invest $50,000 in a soon-to-be-built ambulatory surgery center.

Certainly, they argued, it was time for local physicians to get on hoard and benefit from their piece of the national ambulatory surgery center boom. In singing the praises of this venture, they noted both its likely economic payoffs and professional rewards. Not only would they receive fees for their services, but also monies flowing to the local hospital would come to them.

Additionally, physicians would run the ambulatory surgery center, providing an opportunity to express their leadership skills and entrepreneurial interests. Given the surgery center's planned customer focus and low over-head costs, Dr. Schmidt bad been excited for several days about this opportunity.

A bit of reading this evening, however changed all that. Now he wasn't so sure.

In particular, two articles in recent editions of the Healthcare Executive and The Physician Executive concerned him. Specifically, a discussion of the specialty care debate (1) left him wondering how hospital executives, his patients, and the community would perceive him if be proceeded with the venture.

He did not wish to be accused of siphoning resources needed to maintain critical services such as the local emergency room. In addition, noted futurists interviewed in The Physician Executive (2) suggested that investments in ambulatory surgery centers might be exceeding the need for these facilities.

Remembering his prior unsuccessful investments in tax-sheltered oil drilling and cattle breeding operations decades ago, he was clearly concerned about the possibility of becoming an unhappy physician investor in a potentially overbuilt marketplace.

The time had come to carefully consider his options, but he was still puzzled by how to effectively think through the alternatives.

The world is full of seemingly good ideas. With thousands of people thinking about and pursuing similar ideas simultaneously, however, even those ideas that seem to be sure things may offer no sustainable competitive advantage.

While it is clearly important to generate a range of creative possibilities, rational evaluation is also critical to long-term success. As a senior physician decision maker, have you created and followed a process that allows you to clarify what it is about your new potential product or service that sets it apart and ensures profitable demand for it? Does the idea you are considering provide you with a competitive advantage that builds on your unique people and financial resources in a way that is not easily replicable by your competitors?

In health care, many organizations moved from one apparently good idea to the next during the past decade. It seemed hard to argue against the advantages of enhanced quality or powerful alliances, but the majority of hospitals and group practices failed to build these ideas successfully into their operations.

Similarly, investments in re engineering and technologies such as electronic medical records often drained financial resources, depleted morale, fueled turnover and left many in health care wondering what's next. (3) Maybe it's time to expand your search and evaluation techniques beyond listening to the common wisdom.

Following the herd requires little independent thought. You can act on automatic pilot by simply watching others and replicating their moves.

In the short ran, this is often the path of least resistance. It also minimizes personal risk by providing a ready justification (i.e., everybody else agreed this was a good idea) for less than successful leadership choices.

Unfortunately, the long-term consequences of this mindless decision-making style have been costly for many health systems, hospitals, and group practices. (4)

Creative ideas essential to winning

The quarterback takes the snap, drops back, turns and looks down field for each of his receivers. No one is open.

The moment his strategy is interrupted by unexpected competitive responses, he immediately looks for new opportunities. Where on the whole field can he now move the ball to achieve competitive success? Most of his blockers went right--the direction of the original play.

Taking cues from these blockers and from where he is looking for receivers, defensive players also move in that direction.

Rather than following the herd and joining the crowd on the right, his best opportunity may lie in an unexpected naked reverse to the left.

Efforts to succeed by extending revenues or wringing cost savings out of old business lines have limited potential for expanding future returns. There are only so many patients you can see in a day and so many nurses you can do without.

Given past failure rates, further economies of scale through mergers and acquisitions also seem unlikely to succeed.

Instead, it is critical to differentiate your organization from your competitors. This requires new ideas rather than simply retreading information generally available throughout your industry.