Hartford Business Journal

www.HartfordBusiness.com June 13, 2016 • Hartford Business Journal 25 BIZ BOOKS Tips for managing strategic changes "S tragility — Excelling at Stra- tegic Changes" by Ellen R. Auster and Lisa Hillenbrand (Rotman-UTP Publishing, $27.95). Stragility (n.) — the ability to adapt to changes in your market space and stay on course. What does adaptation involve? Sys- tematically reassessing "winning." To do this, a company must do more than measure outcomes of current activi- ties. It must also look deep- er into changes affecting outcomes by differentiating between the execution-relat- ed, the "ineffective choices because of sunk costs" and those caused by market shifts and competition. Trendspot- ting also plays an important role in course adjustments. The authors offer a num- ber of tools that help a com- pany make "this-day- forward" decisions: "Shifting through back- casting." — Use insights from today to imagine alternative futures. Develop other strategic visions of tomorrow and decide how to best evaluate them. Invest in pilot programs to test assumptions and use the results to adjust course. "Sensing PESTE (political/legal, eco- nomic, social, technological, ecological)" forces that affect the company, its exter- nal stakeholders and the marketplace. — It's a comprehensive "what if" exercise that identifies potential opportunities and obstacles. Political/legal deals with regula- tory environment, taxes, trade agreements and governmental incentives. Economic looks at interest/ exchange/inflation rates, the labor market (i.e. skill availabil- ity, cost). Social involves customer demographics. Technologi- cal really involves crystal- ball thinking because such changes usually are dis- ruptive and quickly affect internal processes, and the economic and social envi- ronments. Ecological not only deals with the planet/natural resources, but also the community. "Sensing the competitive landscape." List your major competitors and look at their differentiators and the strengths and weak- nesses of their strategies versus yours. Look at industry trends (i.e. cable TV has been affect- ed by video streaming) and relate them to the PESTE analysis. Also look for outliers (Black- berry was ambushed by Apple's iPhone). All of the "this-day-forward" analysis and adaptation requires a workforce attuned to change. People need to understand the "why" of the new way of doing business. "Communi- cate, communicate, communicate." Provide the resources and training they'll need to do things differently and to do different things. Listen to ideas and feedback. • • • "XLR8" by John P. Kotter (Harvard Business Review Press, $25). Traditionally, organizational processes have been built around running what's direct- ly in front of them. Kotter maintains that ingrained processes can't quickly respond to change and competi- tive threats, nor seize opportunity. He advo- cates a networking (people, not IT) system that operates in concert with the processes and procedures system. Why the dual system? People accelerate progress; pro- cesses and procedures impede it. "The network side mim- ics successful enterprises in their entrepreneurial phase." Because it's not hamstrung by the bureaucracy of org charts, titles and job descriptions, it "liberates information" by fos- tering communication and initiating individualism and creativity. It doesn't create organi- zational anarchy because the networkers work within both systems; they know how the firm does business. Rather, it brings together "volunteers" at all levels to provide top-to-bottom perspectives of issues, alternatives and opportunities. When employees become agents of change, they "desire to work with others for an important and exciting shared purpose." Siloes crumble. Leaders emerge. The coalition of networking volunteers has a sense of urgency about the need to think and act on continuous improvement and capitalize on opportunities. To sustain urgency, celebrate all wins. These make even the most command- and-control manager take notice of the contribution facilitated by collaboration. The processes involved in achieving wins become part of the organization's core system of processes and procedures. The dual system institu- tionalizes change through evolution. n Jim Pawlak is a nationally syndicated book reviewer. Jim Pawlak EXPERTS CORNER The changing long-term care paradigm By Matthew S. Bavolack W ith close to 15,600 long-term care providers operating throughout the country and a continually changing regulatory environment, providers face a variety of operational and compliance chal- lenges. Opinions on which are the most press- ing challenges depend on whom you ask, but two key areas of change come up repeatedly: residents' care needs and reimbursement. No longer are nursing homes places where the elderly end up spending their last years by default, and no longer can opera- tors rely solely on restorative care as their fail-safe to break even. So what might the nursing home of tomorrow look like? • Care needs will continue to drive the future of the nursing- home industry. Today's and tomorrow's resi- dents will arrive at the front door with more complex needs, based on the longer lives we are living and the progression of dementia in the advanced-age population. Dementia care needs will be expanded to parallel the advance of the disease. Another thing's also for certain: Care will be continue to be regulated. • Nursing homes won't be a place for restor- ative care, which is migrating to out-patient clinics and other types of facilities. We're already seeing joint replacement rehab moving to non-institutionalized settings. • Resident rooms and physical plants will look different. The Baby Boomers of today don't just want but demand a home-like setting, including spacious private rooms with private baths. Facilities designed to appeal to this gen- eration's tastes and expectations will replace the institutionalized settings that still often characterize many of today's nursing homes. • The aging infrastructure will be replaced by smaller facilities offering a "neighborhood" environment where employees serve as care- givers, cooks, administrators and the myriad other roles entailed in resident support. • Employees will be crossed-trained in order to improve efficiency and cost effective- ness, as market demand for services increases and the workforce simultaneously shrinks with the aging of the Baby Boomer generation. Challenges in reimbursement With an aging infrastructure and shrink- ing reimbursements from both government and private payers, how can a facility opera- tor continue to provide care and remain prof- itable? Operators who are not aggressively developing strategies for survival will find themselves out of business in short order, as the regulated environment for nursing homes gets ever-stricter and less lucrative. Recall Newton's law of motion: An object in motion stays in motion and an object at rest stays at rest. Reimbursement will remain a challenge as both federal and state regulators continue to look to cut already stretched budgets. But there are opportunities for nursing-home operators who embrace change. The para- digm is already shifting from volume to value, which refers to the shift of reimbursement to an outcomes-based model. The federal government has clearly out- lined its goals and objectives as follows: • To move 30 percent of all Medicare payments by 2016 to an alternative payment model focused on how the provider commu- nity cares for their residents, instead of the volume of care being provided. • To continue to extend the value vs. vol- ume concept to 50 percent by 2018. • The result of this shift to a value-based purchasing model is intended to reduce nurs- ing home lengths of stay. Adapting to a changing environment In order to meet these changes in care needs and reimbursement, providers will begin devel- oping programs beyond the traditional nursing- home model. Transitional-living units and assisted-living wings will be developed within the existing facility footprint. Funded through nongovernmental sourc- es, these programs will complement shrink- ing lengths of stay while offering residents an alternative. Expanded programs such as these afford a provider the ability to connect with the family and to offer an alternative prior to transitioning to a home-based setting. The challenges in the nursing-home market will continue to force change, and providers who recognize and embrace the opportunity will be the survivors with health and longevity. n Matthew S. Bavolack is the national health- care industry group leader at accounting and advisory firm Marcum LLP. Matthew S. Bavolack ▶ ▶ Use insights from today to imagine alternative futures. Develop other strategic visions of tomorrow and decide how to best evaluate them.

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