Improving Competitiveness For Less Than $100 Million

Does $100 million secure your competitive future? Maybe. A hospital I know quite well just announced a $100 million expansion driven by the need for more private rooms, all in the quest to "remain competitive."

I don't doubt that "remaining competitive" is important. It should be. The alternative is a long, slow slide into irrelevance. And this hospital is far from alone in leveraging-up its balance sheet to eliminate the anachronism of semi-private rooms.

And, yes, facilities have finite life spans. A former boss of mine was fond of saying "Never miss an opportunity to tear down an old building!" Sometimes it has to be done.

But what if that kind of "build a better box and they'll come" thinking is terminally flawed?

Flawed by health care's thundering herd?

• "Are we doing this because everybody else is so we must do it too or suffer the consequences?"
  

Flawed by the behavioral limits of "bounded rationality" - i.e. the refusal to ask how else one might deploy $100 million to gain competitive advantage - if you weren't building new beds, that is?

• "Are we acting like Hill-Burton is alive and well and hospitals are defined by their inpatient chassis? What if we just re-decorated and operated our semi-private rooms as private rooms, spending scarce capital elsewhere on stuff that's truly difference-making?"
  

Flawed by a leadership team unused to thinking outside of the "hospital box" and enabled by a risk-averse Board?

• "Dare we ask: 'Can we spend LESS money on facilities and MORE on new care models, new care settings, new technologies, new networks and integration opportunities that might be templates for the NEXT decade instead of the last?'"

Maybe it's flawed research and asking only questions to which you already know the answers?

• "We asked consumers and they told us they want all-private rooms. Big surprise. But did we ask the right question? Hmmm. What if the choice was between (a) an expensive new private room with "pretty good but not world class technology", or (b) a less-expensively renovated, formerly semi-private room WITH demonstrably world-class technology and customer-friendly care models available nowhere else in the market?"

Maybe it's flawed scenarios?

• "What if we're forced to compete on price? What then? How important will a de-leveraged balance sheet be in that new environment? We considered only those scenarios likely to make the investment successful. What about those opposing scenarios?"

I'm not privy to this particular hospital's $100 million bed tower deliberations. But I'm betting the press clippings from the grand opening three years from now will rave about wireless internet and flat-screen TVs.

Well, what do you expect for $100 million?