7 Key Ingredients for Today’s New Value
While some things never change in established healthcare business (e.g. operating profitability is necessary 99% of the time) there have been some shifts of emphasis. At the foundation is an expectation that a business will have a sustainable future, so that a new owner will generate at least a modest return on investment in a rapidly evolving marketplace.
What is necessary for success? Here are seven significant ingredients for the recipe:
- Financial resilience – the company is able to make a profit though there may be either cyclical times of poor performance or the owner is making a thoughtful strategic decision that may decrease revenue and/or profits in the short-term.
- Cash Management – cash is being managed in a conservative manner so that it can be used for diversification and expansion with less reliance on outside capital that would have been there five to seven years ago.
- Lean Structure – the company is organized to serve customers and this is the mantra of the organization vs. the departmental, self-preservational thinking of the past.
- Spreading risk – whether through acquisition, merger, divestiture, or organic growth today’s entrepreneur looks to spread risk including vertical integration to build related streams of revenue.
- Owner freedom – the organization is able to be productive with good quality in the owner’s absence and the owner is often re-positioned more strategically to initiate action with a long-term view.
- Innovative encouragement – employees and related others are encouraged to experiment with new approaches to delivering services and products without criticism based solely on failure.
- Autonomy and accountability – members of the organization agree to be accountable for their outcomes and they are given room to be uniquely creative.
There was a time when mediocrity was passable in the world of healthcare. This is less and less true as performance standards rise with an increasing intolerance for excuses and the willingness to change.