The Catch 22 of Focusing on Cost Reduction
We see thousands of ads everyday, the sheer number can be overwhelming. But this ad immediately grabbed my attention because it was so different.
At first I had to stop and take in what was happening.
I was initially reeled in by the play on words, “Lose Wait” – very clever. Was this a new way to lose weight? It wasn’t – but it was!!! Just a different kind.
Then the statistic hit me … 82% is pretty compelling, and what was even more compelling was what people were saving – time. Time spent waiting in a line, one of the most universally disliked time wasters.
But what really struck me was what LiveHealth Online had done. They had transformed a key part of the healthcare system as we know it. They did not just tweak it by automating a few things or adding new functionality, they changed the entire game.
Roy Schoenberg, President and CEO of American Well Systems stated, “In-home telehealth services and urgent care consultations are growing at a rapid pace and American Well is prepared to meet rising provider and patient needs for live, on-demand care.”
When I put what American Well did through my test of “The Five Guiding Principles for Accelerated Collaboration”, they hit a home run:
- Real time communication tools – ✔
- Built rich communication between people – ✔
- Targeted high ROI collaboration benefits – ✔
- Compressed timeframes – ✔
- Enabled small teams (of Healthcare workers) – ✔
The requirement for high quality, cost effective healthcare for all has been driving health care organizations to explore how technology can enable telehealth possibilities for many years.
Video conferencing has always been a key technology enabler for telehealth, which is currently undergoing a shift to software based video/collaboration solutions that run on people’s personal technology – PCs, Macs, tablets and mobile devices. This shift is enabling new possibilities and changing the landscape of how things are done with video.
American Well is not alone; I see the Healthcare industry collaborative ecosystem being transformed in groundbreaking ways by many integrated healthcare delivery networks.
Other industries should take note of what can be done.
Cost Cutting Approach
The type of transformation that is happening in the Healthcare industry cannot be achieved with a “cost saving” approach. The biggest mistake organizations make while enabling their ecosystem with better collaboration tools is to focus on cost avoidance.
Making changes with cost avoidance as the primary focus, e.g. the costs of the technology, is like focusing on the trees (costs) and not realizing that you are in the middle of a forest (the long term benefits). The trees (costs) are in the way and are preventing you from seeing the bigger picture.
It’s not that the wise use of dollars isn’t important. It is, but if the five guiding principles mentioned above are used to affect transformational change, you will save a lot more money than can be realized by focusing largely on change driven by cost savings.
A cost savings approach often starts with a mandate from higher up in the organization for immediate cost reductions to improve the bottom line. This is an operational ROI approach – the low hanging fruit. Operational savings are when you either stop doing something you used to do, or do it differently, in a way that allows you to get a similar result with less cost.
Sometimes achieving an operational savings, can actually have compounded benefits with productivity gains, e.g. using video conferencing to avoid travel costs has an added and significant benefit in that it provides productivity benefits and can speed execution of business. But these are usually what I call “side effect” benefits or unplanned benefits.
Is Cost Cutting going to have a Negative Impact on the Collaborative Ecosystem?
Saving money in implementation often simply transfers the costs to the ongoing operation of the ecosystem. The dollars spent on the operation of the ecosystem which is sub-optimized, will far outweigh any saved implementation dollars. I don’t have an exact formula but it would be something like $1 cut in implementation will cost you $3-$6 in ongoing operation. And an ongoing operation like a collaborative ecosystem is meant to be in place for a very long time.
There are savings to be had with an operational approach, but by focusing on productivity and strategic ROI, an organization can perform 3-6 times better than it would otherwise.
If I look at what American Well is doing the operational, productivity and strategic benefits all compound to give you 3-6 times the performance compared to the old way of doing things. Here are some of the benefits:
- Saving people’s time – on average 2 hours according to the survey. This is massive.
- Saving the patients the cost of traveling back and forth for an appointment – gas, vehicle wear and tear …
- The doctors and specialists can actually make the calls from their homes or offices. No need to come into a clinic or hospital.
- The requirement for medical buildings is reduced – huge infrastructure savings over time.
- Patients can be processed quicker and the output of the entire system has been increased – huge benefits.
- If there is a need to cancel, the patient and doctor can easily do so without a major impact to either.
- Reducing greenhouse emissions.
- And there are many more implications …
Trying to save money by cutting costs when there is an opportunity to transform an ecosystem through greater collaboration is going to work against what is possible in transforming a business or industry. That is the “Catch 22″ of focusing on cost reduction. Using the 5 guiding principles of greater collaboration will help increase the velocity of collaboration and supercharge the performance of the ecosystem.
Transform the ecosystem in a way that works well and will get adopted; hearing better, seeing clearly, usability of the system, recording interactions, managing the real time interactions and recordings, enabling new ways of working.
Use the five principles to transform your collaborative ecosystem.
Invest in transforming your Collaborative ecosystem = Technology + Process enhancements + Training
The benefits of a truly transformative collaborative change will continue to ripple through your ecosystem in ways you cannot even imagine.