The Cubs and a struggling hospital — is there reason for optimism, or are both incapable of turning it around?
The Chicago Cubs, in a rebuilding stage, lost more games in the last two seasons than they ever have in the history of the franchise. They haven't won the World Series in nearly 110 years.
Likewise, a struggling hospital has its own set of challenges to overcome. These, over time, have led to a poor financial situation. A struggling hospital often is in a tough payer neighborhood, doesn't have a strength to lead with, and doesn't have the finances to invest heavily in areas that can help it rise from the cellar. When it does invest in an initiative, it often makes the wrong investment.
Rural and standalone hospitals represent the majority of struggling facilities. Thirty-five percent of all acute-care hospitals in the U.S. serve rural communities, according to the American Hospital Association. Fifty-three percent of hospitals are part of a health system, according to data AHA data from 2011, the most recent data available. While the number of hospitals in a system is likely higher today due to the large amount of merger and acquisition activity that has taken place since 2011, the number suggests a large number of hospitals (likely 1,000 or more) still operate with independent governance.
In baseball, the thinking goes, a team can turn a program around by really focusing its resources on the pitching staff. Here, the baseball team has to aggressively ignore other areas and live with low scoring games until the nucleus of a great pitching staff comes along. As this nucleus is developed and grows, the team start to win more games, and eventually, hopefully, has more winning seasons.
In the hospital arena, with a small to mid-sized hospital, leadership often tries to meet many goals (e.g., keep the ED open and working well; start hiring more primary care providers to prepare for population health and protect market share; keep costs low; improve quality on a budget; survive on a payer mix that leans heavily toward Medicaid and indigent patients). These hospitals face many demands and often have few resources, financial or otherwise, to meet them. Standalone hospitals had an average operating margin of just 2.6 percent in 2012, according to Standard & Poor's.
During a hospital turnaround, the most successful leaders often have to starve the hospital in one area and gamble to make the hospital great in other areas. For example, the CEO and board may decide to cut office staff while making alignments with orthopedic physicians. Even here the gamble on each orthopedic physician is a Major League gamble. Some are long-term blue chip contributors, some have one great season, some never make their numbers. And if the finances aren't deep enough, at some point the hospital has to give up on this strategy.
Occasionally, a hospital's troubles are too deep by the time help is brought in that even a highly focused strategy isn't enough to save a hospital. As a result, we see hospitals long focused on preserving independence look to sales or mergers to keep their facilities open. In 2012 there was twice the number of hospital mergers as compared to 2009, according to Irvin Levin Associates. And, 18 hospitals closed their doors last year, many of which unsuccessfully sought last-minute sales or partnerships to stay open.
For the Cubs, their newest focus is rebuilding the farm system. This is not too different than a small hospital hiring lots of doctors right out of residency and hoping they become Major Leaguers. It's not a low risk strategy. The doctors could be there for two years and move on. The doctors may never become great, albeit they are unproven. Similar is the situation with the young prospects a Major League team stockpiles.
As Cubs fans look at this next season, they hope that their team's commitment to the farm system will pay off. And as spring training beckons, the Cub's community is again optimistic that a commitment to one area of strength, at the potential expense of others, will produce the desired result: more W's for the Cubs.
For every local, struggling hospital, one also hopes that a focus on fortifying a few key areas will lead it toward a most stable, and winning future.