Healthcare organizations today are operating in what could be considered a time of crisis. Reimbursement pressure constrains finances, and efforts to contain costs and coordinate care (through electronic medical records, aligned physicians, etc.) require significant capital outlay.
But, according to a new study by McKinsey & Co., reshuffling resources during a time of crisis is more important than dynamic resource allocation than during less turbulent times. Yet, the study — which looked at how companies assigned various percentages of corporate capital to various departments between 1990 and 2010 — found that the economic downturn of 2007-2010 “had virtually zero impact on patterns of reallocation.”
Yet — and here’s where it becomes a competitive advantage — companies that allocated resources more actively performed better than those that didn’t during the economic downturn. Additionally, companies that allocated resources actively also were more likely to have higher and less variable returns.
According to the McKinsey analysis:
“In these circumstances, it is more incumbent than ever on companies to make difficult trade-offs between the funding of promising growth opportunities (which require nurturing with more capital) and of mature or underperforming ones (which may need pruning).
The finding holds particular importance for hospitals and health systems. Not only are they facing challenging times financially, but the industry is on the precipice of major shifts in business models and how care is delivered. Organizations that actively allocate resources to areas that are ripe for growth under this new model will fare better than those that take a more traditional approach.
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