LOS ANGELES (June 8, 2009) As I travel around the country visiting with chief executive officers at health systems and hospitals, I am hearing that consultant accountability is a subject that is increasingly on their minds. Faced with the continuing slide in their payor mix driven by the deep recession, and the reality that they must do more with less, CEOs say they are looking for true partners – people with exceptional expertise or a portfolio of relevant products and services – who are willing to guarantee that the work they sold will deliver the measureable results they promised.
Increasingly, CEOs also are acknowledging that they are equally responsible for the success or failure of a consulting engagement. They are taking a more aggressive approach is defining their expectations for service, quality of the work and measureable results that will be derived from the engagement. This is certainly consistent with many of the comments that I received on a recent blog I wrote: Professional Fees: Entitlement Versus Accountability (Scroll down to read). One CEO wrote that I probably should have titled that column: Accountability: Biting the Hand that Feeds.
Healthcare CEOs know that the political, financial, regulatory and leadership landscape is changing under their feet. They realize that continuing with the mindset of business as usual is a bad option that could be career limiting. Relationships are important. Results matter. Now, so do the professional fees and expenses they routinely pay their advisors.
Not surprisingly, this emerging press for lower fees and tighter expense management is moving to the forefront in defining future business relationships in healthcare. Last year I lost a project because the professional fee I offered – one that would ensure that the engagement was comfortably profitable for our firm (versus really, really, profitable) apparently was not high enough. The consultant who represented this health system in the selection process explained that board members were concerned that I could not deliver a quality project for the price I promised even though our reputation and our varied references said that we have consistently delivered on our commitments. The selection committee picked the most expensive firm in the bidding and then clashed with the partner throughout the engagement. They did not follow his advice. In the end, the Board made the right choices but there was no financial alignment, there was no real partnership with their highly paid consultant.
Historically, the conventional wisdom in business – especially in consulting – has been that you get what you pay for. Okay, I admit there is certainly a history of CEOs who are willing to pay more to be “safe.” However, it is important to note that conventional wisdom is rarely right. There are so many examples where price is not a guarantee of value. Price is important but measureable value is essential. Innovative firms who understand this shift in the consulting landscape are moving to create new ways to meet client needs.
Discounting professional fees is not the answer. Simple discounting does not address the critical issue because simple discounting fails to align the needs of the client with the financial interests of the consultants, the quality of their work, and the value of their recommendations. The answer is, and will always be, shared risk and reward: partnership.
CEOs with whom I visit understand that we have entered a new era of management. That performance and accountability of consultants – indeed all vendors – is more important than ever and that partnership must be more than mere words in a marketing brochure or advertisement in Modern Healthcare.
John G. Self is Chairman and Senior Client Advisor of JohnMarch Partners. He is a Co-Founder of the Firm. A former investigative reporter and crime writer with more than 30-years of healthcare leadership experience in public relations, national marketing, business development and as Chief Executive Officer of hospitals and consulting firms, Mr. Self is highly regarded for his keen insight into operations, business culture and for his ability to consistently select the right leaders. You can contact Mr. Self at 214.220.1234 or JGSelf@johnmarch.com. Or you can follow him on Twitter at Self_JohnMarch.