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By Kenneth Kaufman
In behavioral economics, the sunk cost fallacy describes the tendency to carry on with a project or investment past the point where cold logic would suggest it is not working out. Given human nature, the existence of the sunk cost fallacy is not surprising. The more resources—time, money, emotions—we devote to an effort, the more we want it to succeed, especially when the cause is an important one. Under normal circumstances, the sunk cost fallacy might qualify as an interesting but not especially important economic theory. But at the moment, given that 2022 will likely be the worst financial year for hospitals since 2008 and given that the hospital revenue/expense relationship seems to be entirely broken, there is little that is theoretical about the sunk cost fallacy. Instead, the sunk cost fallacy becomes one of the most important action ideas in the hospital industry’s absolutely necessary financial recovery. Historically, cases of the sunk cost fallacy can be relatively easy to spot. However, in real time, cases can be hard to identify and even harder to act on. For hospital organizations that are subsidizing underperforming assets, identifying and acting on these cases is now essential to the financial health of most hospital enterprises. For example, perhaps the asset that is underperforming is a hospital acquired by a health system. (Although this same concept could apply to a service line or a related service such as a skilled nursing facility, ambulatory surgery center, or imaging center.) The costs associated with integrating an acquired hospital into a health system are typically significant. And chances are, if the hospital was struggling prior to the acquisition, the purchaser made substantial capital investments to improve the performance. As time goes on, if the financial performance of the entity in question continues to fall short, hospital executives may be reluctant to divest the asset because of their heavy investment in it. This understandable tendency can lead the acquiring organization to throw good money after bad. After all, even when an asset is underperforming, it can’t be allowed to deteriorate. In the case of hospitals, that’s not just a matter of keeping weeds from sprouting in the parking lot. The health system often winds up supporting an underperforming hospital with both working capital and physical capital, which compounds the losses. And the costs don’t stop there, because other assets in the system are supporting the underperforming asset. This de facto cross-subsidy has been commonplace in hospital organizations for decades. Such a cross subsidy was probably never sustainable, but it is even less so in the current challenging financial environment. This is a transformative period in American healthcare, when hospital organizations are faced with the need to fundamentally reinvent themselves both financially and clinically. The opportunity costs of supporting assets that don’t have an appropriate return are uniquely high in such an environment. This is true whether the underperforming asset is a hospital in a smaller system, multiple hospitals in a larger system, or a service line within a hospital. The money that is being funneled off to support underperforming assets may be better directed, for example, toward realigning the organization’s portfolio away from inpatient care and toward growth strategies. In some cases, the resources may be needed for more immediate purposes, such as improving cash flow to support mission priorities and avoiding downgrades of the organization’s credit rating. The underlying principle is straightforward: When a hospital supports too many low-performing assets, the capital allocation process becomes inefficient. Directing working capital and capital capacity toward assets that are dilutive to long-term financial success means that assets that are historically or potentially accretive don’t receive the resources they need to grow and thrive. The underlying principle is a clear lose-lose. In the highly challenging current environment, it is especially important for boards and management to recognize the sunk cost fallacy and determine the right size of their hospital organizations—both clinically and financially. Some leadership teams may determine that their organizations are too big, or too big in the wrong places, and need to be smaller in order to maximize clinical and balance-sheet strength. Other leadership teams may determine that their organizations are not large enough to compete effectively in their fast-changing markets or in a fast-changing economy. Organizational scale is a strategy that must be carefully managed. A properly sized organization maximizes its chances of financial success in this very difficult inflationary period. Such an organization invests consistently in its best performing assets and reduces cross-subsidies to services and products that have outlived their opportunity for clinical or financial success. Executives may see academic economic theory as arcane and not especially relevant. However, we have clearly entered a financial moment when paying attention to the sunk cost fallacy will be central to maintaining, or recovering, the financial, clinical, and mission strength of America’s hospitals. Planning your next event? Get in touch with us at the Capitol City Speakers Bureau today to schedule your ideal speaker and make your event a success!
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By Josh Linkner
In the context of seemingly endless volatility, the pandemic has led many of us to pause in order to reassess what it really takes to win in this new era of business. What leadership attributes are needed right now to create a sustainable competitive advantage? In the past, it was enough to be a thoughtful and deliberate manager, executing a plan with precision and accuracy. Today, however, leaders have to embrace a new set of roles and responsibilities to remain relevant and effective. Building on your previous training, let’s explore the five new faces of leadership: 1. Sherpa – The leader of a mountain-climbing expedition’s sole purpose is to help others reach the summit. Sherpa leadership isn’t about individual achievement – you are in your role to serve others – your team, your customers, and your community. If your team knows you are there to help them succeed, they’ll give back far more than any rah-rah speech or management technique of the week. 2. Provocateur – Tip-toeing around deeply entrenched viewpoints is less productive than trying to fry eggs on a hot sidewalk. A key role of great leaders is to challenge everything and be a poking-stick of change. A healthy disdain for the status quo is the hallmark of leaders who shape history. Don’t let fear glue you to conventional wisdom. 3. Futurist – Aiming our efforts at last year’s market data will yield a surefire miss. Effective leaders must clearly articulate a compelling vision of what lies ahead, and ensure their organizations are ready to seize it when that window opens. Imagine all the possibilities, and never allow the past to restrict your imagination. 4. Storyteller – Getting your message to stand out and be heard above the noise can be tougher than running a four-minute mile. Make sure you’re crafting your story – to both internal and external audiences – in such a compelling way that it cannot be ignored. You must communicate your purpose and a clear plan of how you’ll get there if you expect your team to leap forward with urgency and alignment. 5. Speed Demon – The world of getting things 100% right before hitting the market is long over. Today, we must execute and problem solve with ferocious speed, making regular adjustments in real-time. Complete business cycles can now last weeks instead of years. Accordingly, we must build a culture that embraces speed in all aspects of business – from innovation to customer delivery to hiring to technological advances. On the highway, speed kills. In business, speed wins. We all know that the surest path to obsolescence is hugging the status quo. It’s time to relinquish the mindsets and techniques of the past in favor of approaches better suited to the challenges of the day. Good leaders may stay the course, but great leaders reinvent. Planning your next event? Get in touch with us at the Capitol City Speakers Bureau today to schedule your ideal speaker and make your event a success! By Chip Bell
She had the entire line of the check-out counter completely mesmerized. It was as if she was using us as her test audience for a comedy try-out. And she was funny and entirely unleashed. Yet, she never slowed her rhythmic action on the grocery story register and pushing groceries to the bagger on her left. “Do you think she is being sincere or is this just an act?” asked one patron to another just a few steps ahead of me in line. “Frankly,” the woman replied, “I am so tired of plain vanilla service at places like this, I am thoroughly enjoying her show.” The comment made me think about a new tree in the front yard at my river house in North Georgia. It is a Bloodgood Japanese Maple planted last year. It will ultimately reach 20-25 feet tall with a branch spread of 20 feet. But this is its very first Fall. When we walked out of the front door, my wife commented. “It’s showing off!” We stood for a while admiring its beauty, its command of its environment, and the compelling influence it seemed to have over any living creature in its visual path. My thoughts returned to the check-out clerk in the grocery store. What does it take to get associates to “show off?” Instead of hiding under a “don’t asked me anything” curtain of invisibility, what if they were attentive guides and enthusiastic helpers? What if they had special hosting talents which they were excited to share with customers? What if they took a keen interest in a small child in tow or an elderly parent under the watchful eye of a customer? What if they performed a unique heart-warming extra for customers? Encourage your employees to “show off” their best stuff. Let them “steal the show.” Your customers will demand an encore and return with the family, their friends, and their funds. Planning your next event? Get in touch with us at the Capitol City Speakers Bureau today to schedule your ideal speaker and make your event a success! By Ron Culberson. With a master’s degree in social work, Ron Culberson spent the first part of his career working in a large hospice organization as a clinical social worker, middle manager, and senior leader. As a speaker, humorist, and author of "Do it Well. Make it Fun.The Key to Success in Life, Death, and Almost Everything in Between", he has delivered more than 1,000 presentations to associations, government agencies, non-profit organizations, and corporations. His mission is to change the workplace culture so that organizations are more productive and staff are more content. He was also the 2012-2013 president of the National Speakers Association and is a recognized expert on the benefits of humor and laughter.
As a young person growing up in rural Southwest Virginia, I was a bit more sheltered than those who spent their childhoods in urban environments. I had wonderful experiences, grew up with many good people, and honestly, I wouldn’t trade a minute of it. That being said, once I got into the “real” world, I encountered a number of experiences I initially considered unusual, or even abnormal. For instance, my wife grew up on Long Island. The first time I traveled to New York, I found the people to be very…well…blunt. They seemed to say whatever came to mind. In the genteel south, we preferred to show face-to-face kindness and share our honesty behind people’s backs. It seemed like the thoughtful thing to do…bless their hearts. Another sheltered experience I had related to the safety of tuna salad. In the 1970’s, my family was a bit suspicious of seafood since we lived so far from the ocean. So, whenever we went out to lunch, my mother would never order a tuna salad sandwich because, she said, “We don’t know how old it is.” Oh, it was fine to eat it at home where the tuna could go from tin can to fridge in a matter of seconds. But restaurant tuna salad was…well…fishy. In hindsight, I have come to appreciate both the directness of my brothers and sisters from the north as well as the deliciousness of tuna salad sandwiches. These experiences are now familiar to me and thus, they seem perfectly normal. Over the past few years, our world has become more divided. Many people are intolerant of ideas that are different from their own and are equally intolerant of the people who express them. I suspect we see our own people and our own views as “normal” while anything else is considered abnormal. But perhaps normalcy is the wrong way to look at our differences. Maybe we should think in terms of unfamiliarity instead. When our son turned seven, he was the only white American at his birthday party. His closest friends had a variety of darker skin colors and most had parents who were born in other countries. While this was normal for the diverse communities in the Washington DC suburbs, it was unusual for me. I did not see a lot of differences while growing up in Southwest Virginia. My exposure to diversity was limited to black, white, Baptist, and Methodist. And even though we Methodists saw things quite differently than the Baptists, we were nice to their faces. Just saying. One of my son’s friends was born in the U.S. but his parents were born in Egypt. Every time I went to pick him up from their house, his friend’s mother loaded up a plate of food for me and implored me to take more. I was not accustomed to this kind of mid-afternoon welcome meal. But when I learned that this was part of their culture, it was no longer unfamiliar—and I ate without hesitation. That is, unless she offered tuna salad. Finding myself in unusual circumstances has continued throughout my life. I once visited a Rotary Club in The Netherlands where no one spoke English. Yet their welcoming handshakes and warm smiles spoke to our similarities rather than our differences. Several years ago, I had the privilege of doing a presentation at the White House. I was unfamiliar with the protocols for addressing high ranking officials so I simply asked for guidance from my host. Once I learned a few rules and understood that I would not be thrown out for making a mistake, I became more comfortable. And more recently, I visited a community that was heavily populated by those who follow Orthodox Judaism. After wondering out loud about the history of the town, I was given an overview of how the community evolved. It was not only fascinating but I found the differences in our backgrounds much less unusual. Due to my innate curiosity, I seek to make the unfamiliar more familiar. I believe there is a humanity that emerges when we try to understand another person’s experiences. This can lead to greater tolerance of both ideas and people—even though we might not share the same beliefs or perspectives. Now, I don’t want to mislead you into thinking I am accepting of every person or situation that I encounter. There are a few things that still seem abnormal to me. Like drinking buttermilk, preferring cats over dogs, and liking The Princess Diaries 2. But I’m willing to entertain the idea that I may just be unfamiliar with the reasoning behind the attraction to these things. By the way, if you are a buttermilk-drinking cat owner who loves The Princess Diaries 2, I offer my sincerest apologies for hitting the trifecta with this particular example. I think we live at a time when we need to see our differences not so much as abnormal but rather just unfamiliar. In doing so, perhaps we can become more understanding of the things that baffle us and ultimately see many more similarities than differences. I believe that the less unfamiliar the world looks, the more normal everything might seem. Planning your next event? Get in touch with us at the Capitol City Speakers Bureau today to schedule your ideal speaker and make your event a success! By Shep Hyken
Let’s go back to physics class for just a moment. Isaac Newton’s third law of motion states, “For every action in nature, there is an equal and opposite reaction.” I admit to struggling in physics, but this was one principle I understood. The other day, a friend quoted Newton’s third law, and it hit me. Not only does this happen in physics, but it also happens in business, specifically when there is bad customer service or a bad customer experience (CX). So, with that, I bring you Shep’s Law of Customer Service, which is: For almost every bad customer experience created, there is an opposite reaction by the customer. They don’t come back. Notice that I put the word almost in the definition. Let me explain. A company wants a customer to buy its product or service. Then the customer has a bad experience. Perhaps an employee was rude or there was a problem with a shipment and the company didn’t handle it properly. Let’s call that the company’s “action.” The “equal and opposite reaction” comes from the customer choosing not to come back, which is the opposite of what the company wants the customer to do. Where customer service and CX differ from Newton’s third law is that it’s not always an exact equal or opposite reaction. It doesn’t happen every time, but almost every time. What if almost all your customers, as in almost nine out of 10 of them, were to leave after experiencing bad customer service? That’s exactly what we found in our latest customer service research, that 86% of customers are willing to switch brands or companies because of a bad customer service experience. And the company doesn’t even have to deliver truly bad service – just not “good enough service.” Eighty-three percent of customers are willing to switch because another company will give them better service. Now let’s remember that perfection is not reality, so it’s not quite as grim as it may seem. I have emphasized the word almost, and for very good reason. Our research also found that most customers give one or two chances before leaving deciding to leave. While not quite an equal and opposite reaction, it’s close enough to make the point. And mistakes don’t count if they are managed well. A mistake or complaint handled well actually reinforces that the customer made the right choice to do business with that company – sometimes even more than if the mistake had never happened at all. Let’s summarize it this way. When a customer chooses to do business with you, there are two future outcomes. They come back, or the opposite happens, and they don’t. So, manage for the reaction – not the opposite reaction – that you want to happen, which is to get the customer to say, “I’ll be back.” Planning your next event? Get in touch with us at the Capitol City Speakers Bureau today to schedule your ideal speaker and make your event a success! By John O'Leary. This was originally posted on JohnOLearyInspires.com. When John O'Leary was 9 years old, he suffered burns over 100% of his body and was expected to die. He is now an inspirational speaker and bestselling author, teaching more than 50,000 people around the world each year how to live inspired. John's first book, ON FIRE: The 7 Choices to Ignite a Radically Inspired Life was published March 15, 2016. John is a contributing writer for Huff Post and Parade.com. John is a proud husband and father of four and resides in St. Louis, MO. Order John’s book today anywhere books are sold.
While many of us associate retirement with lazy mornings, afternoons on the golf course, and evenings playing bridge, a gentleman I met several years ago took a different path. Instead of slowing down upon his retirement, Pat Hyndman embarked on a second career and became an executive coach. Pat and I met when I spoke at a monthly gathering of business owners he coached. Several of his friends had prepared me that Pat’s health was failing. Almost a year of struggling with stage four cancer had taken its toll. Knowing this, I did not expect to encounter such vitality and passion from a man who was receiving regular chemo treatments and who on that day, was turning ninety-eight. Yes, ninety-stinking-eight! But when Pat saw me enter the room, he stopped speaking midsentence, put his pad of paper down, and said in a loud, welcoming voice, “Everyone, our guest John O’Leary has arrived from St. Louis. Let’s welcome him!” He walked over, looked me in the eyes with a big smile, shook my hand firmly, and thanked me for making the trip. During my three-hour session with the group, while every executive took notes and engaged in the presentation, no one was as dialed in as Pat. He soaked up every word and vigorously took notes. After the session, we celebrated Pat’s ninety-eighth birthday. As we sang “Happy Birthday,” he looked as joyful as a kid, wearing a playful smile and using his hands to spiritedly conduct our singing. After he blew out the candles on the cake, Pat went around the room and celebrated each person in attendance. One by one, he thanked all twenty-five business owners by name, complimented something he respected about them, and shared specifically why he was grateful they were a part of his life. And although I’d met him just four hours earlier, he included me in this celebration. Pat thanked me for waking up early, catching the flight from St. Louis, leaving behind my wife and kids, and joining the group that day. He made each person feel as if the entire party was for us, rather than him. At the end of the evening, as Pat was putting on his coat to go home for the night, I asked what fueled him each day. What allowed him to keep going to work with such energy and enthusiasm, keep fighting through chemo, keep showing up for life? “You know, John,” he said with a smile, “life is a gift. And I treasure each day I’m given. I’ve discovered that a person begins aging only when they stop learning and stop loving. “Plus,” he added, “I made a promise to my wife, Bonnie, seventy-three years ago to stay by her side. I intend to keep that promise.” He winked at me, gave me a hug, and then headed out the door, saying, “I better get home soon or she’ll think I’m running around on her!” Less than two months after that conversation, Pat went home for the final time. But not before keeping his promise to Bonnie, and being by her side when she passed away three weeks before him. For nearly a century, Pat Hyndman showed us how we could live our lives with childlike awe. He knew that life was a gift, that every person matters, and that each day was packed with limitless possibilities. My friends, today, let’s also seek to reveal these truths through how we live our lives. This is your day. Live Inspired. Planning your next event? Get in touch with us at the Capitol City Speakers Bureau today to schedule your ideal speaker and make your event a success! By Donna Cardillo
A few years back during a loss of power after a storm, I went to a convenience store that had electricity to get coffee and ice… essentials during a power failure! A customer (a man in his 40s) saw me trying to juggle several bags of ice and picked one up to help me out to the car. A woman who works there and apparently knows him says, “Leave it to a Marine to help!” On our way to my car, I said, “Thanks so much for your help. That was very kind of you.” Him: Just pay it forward. Me: I always do. I’m a nurse! Him: (Throws his hands up in the air and smiles) Why didn’t you say so? (Nurses, law enforcement folks, first responders, and military folks have a close bond). Me: So you’re a Marine? Him: Yup. 27 years. Me: Thank you for your service. Him: Thank you. I appreciate that. He then puts his arm out to hug me and as I reciprocate he kisses my cheek, we hug and wish each other a great day. And this is what life is made of, these small moments of connection and support. Reach out to another human being with kindness whenever you can, even in the seemingly smallest way. You may make their day as he did mine. You might even unknowingly be throwing a lifeline to someone, often a total stranger, who unbeknownst to you is in a dark place in their life and desperately needed that connection to pull them back into the light. Planning your next event? Get in touch with us at the Capitol City Speakers Bureau today to schedule your ideal speaker and make your event a success! By Kristin Baird
If your recruiting efforts include hiring Gen Z, now is a good time to review your hiring practices. “I can get a job anywhere. I’m looking for a culture.” This statement was made by a bright and talented Gen Z woman at the top of her graduate class. Her education and qualifications make her a desirable candidate for just about any organization. It was clear that she will have her pick of jobs. Here is what I gleaned from our conversation:
WHAT’S IN A CULTURE? Like many millennials and Gen Zs, she wants:
MAKE THE MOST OF THE INTERVIEW I was recently talking with an experienced manager who was having difficulty hiring for open positions. In our coaching conversation, I asked her to walk me through a typical interview. “Carla” described her process for reviewing the resume with the candidate and having them review the job description. There are a few major flaws in this approach:
A great employee relationship starts with a single interview. How are you making the most of those precious interview opportunities? Planning your next event? Get in touch with us at the Capitol City Speakers Bureau today to schedule your ideal speaker and make your event a success! By Mary Kelly
Incorporate these habits into your regular routines to stay focused on what is most important. 1. Plan a trip. It turns out that even thinking about a vacation is healthy. When people plan a trip, they envision the activities, the places they visit, and even the views. That planning helps our brains relax as though we were there. Planning is like a mini vacation for the mind. As leaders, encourage people to schedule vacation time, plan the vacation, and take the vacation. 2. Care for health. Encourage your teams to stay fit with good nutrition, lots of water, exercise, and restful sleep. It sounds basic, but many of us sacrifice our health when we get busy with work. Make sure it is easy for your teams to be healthy at work. Some workplaces have free filtered or bottled water available, and others bring in health lunches for special occasions. 3. Show pride in the workplace. I recently watched a CEO stop to pick up trash on his way to the office in the morning. It was a windy day, and a plastic bag and papers had blown across the grass. He walked over and took it to the trash. “Everything counts” he smiled. He is right. He sent the example that everyone is responsible for the appearance of where we work, and everyone’s actions matter. He instilled pride in the organization by being willing to do what was needed at that moment. 4. Clear the clutter. I struggle with managing clutter, because I work in piles of projects, and my piles expand to fill the space I have. Every week, I schedule cleaning the workspace. I take everything off the desk and then file it, toss it, or organize it. It is easier to be productive and switch gears when my workspace is neat, clean, and organized. 5. Monitor team self-talk. Speak kindly to yourself and request that your team members do the same. Use encouraging words. One of my managers used this phrase to overcome negative language in the workplace toward ourselves. She said, “if you would not say the words you are thinking to your best friend, you should not be using those words toward yourself.” 6. Clarify your vision. Spend team-time brainstorming about what you want to accomplish and how you want to put that into action. Get the team together to figure out what everyone is thinking and capture innovative ideas. Ask your team what you want your legacy to be and craft the vision based on where you want to go. 7. Engage in meaningful activities. Devote your time and energy to projects that matter as a team. Use your specialized skills to help your community. 8. Stay positive. Peter B Stark, author of the amazing leadership book, The Competent Leader says, “As leaders we don’t have the luxury of negative thinking.” As leaders, it is our responsibility to search for the positive aspects and possibilities of every situation. We must look for the opportunities the challenges bring and find ways to make a tough situation better. Planning your next event? Get in touch with us at the Capitol City Speakers Bureau today to schedule your ideal speaker and make your event a success! By Steve Gilliland
The way in which organizations work is drastically changing, and it can get challenging to keep up. Change is inevitable and widespread; employees are tasked with a high workload while having low control over the environment. This can result in frequent burnout, stress, and a high turnover rate. As a leader, work to the best of your abilities to ensure employees are motivated and comfortable. Here are some tips to help you make a difference in the workplace: 1. BE TRANSPARENT A great leader is honest and vulnerable. Employees gel better with a leader who is accountable for their mistakes and their team. When things don’t go your way, remain transparent with your team and give them accurate details about the current situation. This can prevent miscommunication and help ensure that everyone works collaboratively toward one common goal. 2. ASSIST A NEW EMPLOYEE Remember how challenging your first few weeks at work were? Along with learning your job, you also had to understand the office environment and meet new colleagues. Being a leader doesn’t only mean you’re responsible for decision making. Ensuring all employees are comfortable is also the work of a good leader. Make a new employee’s day by helping them find their way around and feel welcome. 3. REMEMBER: YOUR EMPLOYEES ARE YOUR STRENGTH Although client satisfaction is important, your employees are the backbone of your business. They are the ones who can truly help your company flourish. Ensure that they receive constant help and support whenever needed. Sometimes work can get overwhelming; talk to them to ensure they’re not in burnout mode and are maintaining a healthy work-life balance. Focus on setting a better retention strategy and improve the work environment overall. Planning your next event? Get in touch with us at the Capitol City Speakers Bureau today to schedule your ideal speaker and make your event a success! |
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