Case Study: Business turnaround of loss making health clinics
Mark Palmer
Mark Palmer Client Satisfaction Guarantee
Client

Federally qualified health clinics with over 50,000 patient encounters per year, 105 employees and annual budget of $10 Mn

Problem

The clinics had exhausted their line of credit for operating expenses and were placing a huge burden on the already overloaded emergency room. The clinics were in jeopardy of closure because they had a mission to treat all patients, regardless of their ability to pay.

There was a sharp rise in the number of people who couldn’t pay for the services. In addition to a decline in community giving, the clinics were losing $250,000 a month in the earlier part of 2013. Unfortunately, the community had come to believe that the clinics were self serving with an incompetent management.

Major medical providers, philanthropic foundations, politicians and general public were all in consensus that the clinics were too dysfunctional to risk extending support.

Solution

As an interim CEO, I had to evaluate options of closure, bankruptcy or merger. Closure was ruled out since that would have placed a significant strain on the rest of the medical infrastructure of South Santa Barbara County. With the main aim to reinvent the clinics, I deployed the following steps to formulate a go-ahead strategy:

• Conducted an objective situation analysis with main focus on the end result, the current scenario and the stakeholders
• Aligned the stakeholders with the current scenario to ensure buy-in
• Formulated a plan to assign responsibilities and warrant answerability
• Executed, reviewed and repeated till achievement of positive results

I put up a 100-day turnaround plan in motion. Sourced funding of $6 Mn from a coalition of donors based on a few steps taken in the right direction. The board was re-structured and expenses were cut down drastically e.g. the administrators moved out to low budget locations, the group's 2,990-square-foot offices were leased out and reimbursement rates were revamped.

Throughout the journey, my mantra was “When you’re losing money, you have to find ways to save it”.

Result

Based on various candid discussions undertaken with all the stakeholders, I re-established trust in the organization. Ensured recruitment of a world class CEO within 91 days of taking over and mentored him to deliver exceptional results month-on-month. Cordial and beneficial relationships were re-established with the federal and local regulators and every patient was served.

On the condition of fulfilling the following parameters, I managed to secure performance based funding:

• Function as President of the board to mentor and oversee working of the new CEO

• Deliver the agreed upon goals every 30 days and receive funds on a monthly basis (with a promise to ensure reduction in funds needed)

• Revamp the organization into a productive and vibrant one