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Don't fail to innovate in troubling times

January 1, 2009
by Edward M. Diehl
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This article launches a new column for Addiction Professional on management topics. In this first installment I will attempt to make certain that I not write as a CEO to other CEOs and business leadership exclusively. My focus is to speak more broadly to all treatment professionals.

President Bush finally concurred with what we all knew from at least last August: The economy was in freefall, spurred by greed, less than aggressive government oversight, bad mortgage lending and all the rest. The jury is still out on whether the massive bailout to the financial industry will help the country in the long run, and few appear to be excited about multi-billion dollar loans to automakers. As I write this, President-elect Obama is seeking an economic stimulus package of just under a trillion dollars. With the exception of Wal-Mart possibly, none of us will escape the catastrophic reduction in business and personal wealth that the nation is experiencing. We all know people who will not retire as planned, and most of us would be foolish not to worry at least a bit about potential loss of employment, security and life as we have come to expect it.

We who are employed in the work of professionally treating the illness of addiction look to how the global recession will affect our specialty. Let me cite just a few of the ways. Private practitioners might well see fewer clients with resources to pay for individual counseling. Census in residential treatment centers has fallen off, most notably in 2008's fourth quarter. Centers that rely exclusively on self-pay and those with a high percentage of patients who use their personal resources are the first to suffer. But centers that depend on insurance reimbursement soon might see fewer admissions as employer-sponsored health coverage tightens. And lest we forget, one can't use employer-sponsored health insurance if unemployed.

Edward m. diehl

Edward M. Diehl

What any business does when income falls because of external factors is to turn immediately to the task of bringing expenses in line with reduced revenue. Smart business leaders try to get ahead of the curve and anticipate the worst-case scenario. In other words, they cut spending as aggressively as possible and ride out the storm. Prices and purchasing terms for products or services are typically reduced as a means of stimulating business. We currently see evidence that treatment centers that didn't accept insurance previously are now reconsidering that position, and many have begun to offer discounts and flexible terms.

Careful approach

Our industry is not in the business of selling toys for Christmas, of course. We are in the business of healing, of actually saving lives in a field with few trends to follow reliably. Regardless of this noble calling, our business managers must employ tried and true business strategies, but we can only hope crucial decisions to save money are reached carefully and accommodate our unique services. Dedicated professionals are right to be concerned that cutting spending, and that means personnel costs and countless other items that are critical to providing good care, can threaten quality.

Where treatment quality might be most vulnerable is in organizations where business leadership is far removed from the actual services being provided. In this circumstance, business managers and clinical leaders should be encouraged to close this separation immediately, and work to establish consensus regarding decisions that serve to enhance efficiencies. Professional staff with a sense of ownership in the process surely will have a stronger stake in the solutions put forth in any successful plan of action.

Collaborative processes have proven to be wise. They breed trust. No one needs the historic antipathy between labor and management at times like these. It serves no one.

Unless managers within treatment organizations are hypersensitive to the need for thorough and timely communication, the potential exists for misunderstanding, fear and distrust. At a time when it is so critical that business managers and treatment staff come together as never before, the threat of disunity exacerbating the economic challenge we face is great. Plans for change cannot be communicated enough to staff colleagues at every level. Clarity of purpose about the challenges that lie ahead is essential.

Room to innovate

But a strategy for these times is not simply about cutting costs. There must be room for innovation. Cuts buy a business time, but little more. Smart businesses preserve at least some of the resources derived from reduced spending to invest in—that's right, to spend on—innovation.

After all, if an organization simply gets smaller or less costly to operate, it will have only a “wait and see” strategy for the future. The addiction treatment field cannot simply raise the umbrella and wait for the storm to pass. We absolutely must be working to launch a strategy at the first sign of sun, if not before.

Bringing innovation into the crisis management strategy is not meant to imply that treatment providers should look wildly outside what they do best and implement a completely new service. Although diversity is quite often an aim of innovation, we should look first at our core strengths. Make certain that your organization embraces what it does best, then join your staff colleagues in fielding your expertise more efficiently, instituting persistent measures to do more of it. It is only after these objectives are met that we might consider innovations beyond our organizations' traditional areas of expertise.