Understanding the Link between Organizational Culture and Profit Margin
By Jonathan Goble, CEO Charthouse Learning
All corporations, for profit or not for profit, must have a margin. The cost of healthcare has been scrutinized for many years and yet it continues to rise. Hospitals are becoming more financially challenged and leadership has to determine the strategy to sustain the financial health of their institutions. There are two opposing strategies to accomplish both improved culture and margin. Does the leadership focus on the margin so the team can pay higher wages and pay for the “nice things to do for the staff” to then improve the corporate culture? Or do they focus on the organization’s culture to improve the margin?
Think about the following rationale: 1. If an employee understands their work has meaning and they have fun at work, 2. Then, the employee approaches their work with a different level of passion and attitude, providing better patient service, 3. Then, the patients feel the organization values them differently than other providers, 4. Then, the patient develops a loyalty to the organization, 5. Then, market share increases, 6. Then, occupancy increases, 7. Then, the cost per unit of service (per admission or per day) decreases, 8. Then, Profit Margin increases.
Yes, I know this takes time. (Not all that long, however.) Yes, I know this negates issues such as inflationary pressure on wages. (Those have been and will always be there.) Yes, this is presuming the leadership team can change their attitudes about who serves whom. (Organizational Culture is always about a true team approach to leadership.) These are reasons leadership uses to not travel the difficult road to change.
What is the Real Role of Healthcare Leadership?
When local or system Boards evaluate healthcare leaders, they usually use things like margin, quality indicators, market share, employee satisfaction, employee turnover, physician engagement, etc. While these are important, they are the endpoint, notthe primary strategy. I would contend they are simply positive outcomes of a positive corporate culture. Our responsibility is to develop the means to those outcomes.
A few years ago, my executive team had a serious debate about our purpose. Why did the organization exist? Some said we existed to make a profit. Others said we existed to make sure our patients received the highest level of quality care. Still, others thought we existed to grow our market share. All these are important but, as the President and CEO, I felt differently. I believed, and still do, our job was to improve the lives of the people with their hands on the patient. If you still wonder what I mean by that statement, you need to read the first part of this blog again.
The real question in your mind should be, “How do I do that? What’s my role? Where do I begin?”
The impact of FISH! on Healthcare Profit Margin
Think about this. If the leadership of any healthcare organization was to simply grant permission to their employees to do the following:
- Choose Your Attitude (Take Ownership of your approach to problems.)
- Play (Have FUN at work.)
- Make Their Day (Create Joy in the workplace.)
- Be Present (Connect Fully with the patients, their families, and the physicians.)
If we could put even part of these into place in our hospitals, would it make a difference to the patients? Would it change the lives of every associate, including physicians, nurses, housekeepers, plumbers, cooks, security guards, receptionists and, yes, even the leadership themselves?
I contend it would make a huge difference. If you provide a great service, at a fair price, with good customer service, you won’t be one of the best in the market that you serve. You will be alone.
Jonathan Goble is the President and CEO of ChartHouse Learning, the official home of The FISH! Philosophy. For more than 50 years, ChartHouse Learning has helped people live successfully and joyfully in all parts of their lives, especially the major portion they spend at work. Whether the message is delivered by video, book or speaker, ChartHouse helps to inspire the human spirit. Jonathan and his organization provide programs that hospitals and health systems can use to move people into positive action. Learn more at fishphilosophy.com