Does it really matter what I think? What do you think? I want to know what you believe about the future of healthcare. Great leaders figure out what they believe about the macro trends in order to inform the strategy and actions that you will take. Let me know. What do you believe?
Today in health, it, I get to ask the questions. And my question is what is your take on the current market? My name is bill Russell. I'm a former CIO for a 16 hospital system. And creator of this week health, a set of channels, dedicated to keeping health it staff current and engaged. We want to thank our show sponsors who are investing in developing the next generation of health leaders.
Gordian dynamics, Quill health tau site nuance, Canon medical, and current health. Check them out at this week. health.com/today. All right. Let me share. Today's story comes from Becker's actually Friday, May 13th, , here's the title of the story? Citing inflation to New York hospitals. Lay off 4% of staff.
, it gives you the name of the two hospitals and they're laying off 4% of their staff, Richard Duvall, who serves as the president and CEO of both hospitals. I said the layoffs occurred because the hospitals are feeling the financial effects of inflation and a decrease in COVID-19 hospitalizations. By the way, that is a recurring, recurring, recurring theme of health systems, especially the smaller health systems that I'm talking to.
Specifically Mr. Duvall said the organizations costs have gone up by 30% because of inflation while the hospitals expected revenue. , has decreased by 2.7%. That obviously has made us, or brought us to a difficult decision. And we are forced to take some fiscally responsible action. Mr. Duvall told the radio station news station of whatever it is, WW N Y. We've been monitoring the situation over the last six months, but unfortunately the first quarter of this year definitely volumes have continued to be down. It's the layoffs effect, mainly employees in accounting and other back office roles, according to the report.
Let me tell you, what's just underneath this latest articles on finance advocate, Aurora posts. Two hundred fifty $3 million net loss in Q1. And the one that's even more alarming, common spirit posts, 591. Million dollar quarterly operating loss. That's an operating loss. Okay, so that loss is going to be higher than that for the quarter, given what the stock market has done.
But 591 million in an operating loss. Okay.
These are bad numbers. I think this is likely more than norm than system's doing well. It will likely be worse as a percentage and the impact for smaller systems obviously than larger ones. And although to be honest with you, it's hard to sustain a half million dollar loss for any size company. , I don't share this and these numbers to scare or depress you. My, so what on this story is, , the world has changed and healthcare moves too slowly, still at this point to keep up.
While we are patting ourselves on the back for how quickly we moved during COVID. , we still are missing key movements in our world that are going to impact us significantly over the next decade. When I was CIO, I would take the healthcare decks from Deloitte Accenture. , McKinsey, Oliver Wyman and some others, and a few key articles and white papers that I'd read. And I clip those out throughout the year and I put them all in a folder.
I have my admin print them all out. And I would take over a conference room. I take the printouts. , from each one of them and I've started putting stuff up on the wall. I'd look for common sentiments, key numbers. , and research trends and forward-looking statements. I then come up with what were my, I believe statements. I've talked about this before on the show, but in case you haven't listened to that episode, I'm going to go through it a little bit again.
Let me give you one of my,
I believe that we have a nursing shortage today and that it will not end in my lifetime. Okay. Which hopefully it will be 40 years or so, but, , it's not going to end in my lifetime. That's one of my, I believe statements. I believe that we have a nursing shortage today that will not end in my lifetime.
It won't end because demographics won't let it end. The baby boomers are aging, which means more healthcare is required. More nurses required. And following the baby boomers, we had a dip in births, which means fewer workers to do the work. That's a massive shift and it is a POTUS right now. I believe that inflation is a battle that will take upwards of two years to team.
We will see rising prices on food, particularly through 2024. , we have a war going on between the number one producer of wheat and the number five producer of wheat. , so that's not good. And, but that's not all China is temporarily. I banned the export of a fertilizer. To the world through June of this year to ensure their domestic supply less food produced means higher prices.
, chips. I believe that the chips shortage will continue indefinitely for the U S companies or at least until we put manufacturing back in the U S which may take five to 10 years, depending on our willingness to do this, but it really has to happen just based on the geopolitical situation and supply chains and how it was impacted.
Through the pandemic. , and so from that perspective, as a CIO, I'm sitting there going, oh, wow. I'm going to have to plan on doing more with less switches and less routers. , less computers for the next couple of a years, we're just going to have a slow supply of those things. And it's going to be hard to get some key equipment.
, once I have my, I believe statements. I'm ready to start planning on my message to the executive team to ensure that my health system is ready for what comes next. In many cases, those same slide decks. We'll offer a glimpses, , into what I should be looking at. Automation, robotics. , remote care, strategic partnerships may be the order of the day.
It depends on your house, some your market and the regional market you live in, but those, those larger decks will give you some inclination of what you need to do to get around some of these trends that we're looking at. , there are macro trends and micro trends. This is where. My economics degree comes in handy and why I'm a huge proponent of getting an economics degree to students who asked me, , because I think it teaches you how to think it teaches you how to create models and frameworks that make sense of the world that we live in.
Again, getting back to my, so what, , we should have seen all of these things coming in, the nurse shortage, the chip shortage and those kinds of things. Maybe not. Before the pandemic, but once the pandemic hit, we should have been sitting in a room and saying, okay, What does this mean? Longterm? What does this look like longterm? , not that it was avoidable. Mind you. That's not what I'm saying at all.
, not all macro trends are avoidable, but we can plan for them. Nonetheless,
the higher up you are in your health system. , the more it is your responsibility to know the trends in your space of influence. If you're the VP of infrastructure, I expect you to have a point of view on edge computing. If you're the VP of applications, I expect you to have a point of view on, on no-code low-code solutions on fire, on platforms.
All of these points of view must be in the context of healthcare. If you are with the healthcare system, but rather a vendor that partners with healthcare and you're sitting there going, yeah, they should plan ahead. , what is your point of view on the space you're selling into? , also, you should know the environment you're selling into. This is one of the mistakes I hear all the time. It's like, I don't know why CEO's, aren't considering my solution. Now. I say, what's the environment you're selling into. And they're like, what do you mean.
, you know, cause sometimes it's a, it's an environment where it's very tight budgets. Sometimes it's not tight budgets. Sometimes you're selling into a health system that has a focus on quality right now. And whatever you're selling, isn't focused on quality. , and so whatever you're selling into matters, you should have your, I believe statements what's going on in your health systems. What's going on in the markets that you're serving. , you know, it, it would appear from where I'm sitting.
That the playwright now is going to be on quick ROI projects. And by quick, I mean really quick ROI projects and, and projects that don't require equipment that you can't get.
I'll just wrap this all up by saying, what do you believe? What do you believe about this market? What do you believe about what's going on? What do you believe about the chip shortage? What do you believe about the nurse shortage?
, what do you believe about the state of healthcare and where it's going? What do you believe about big tech and healthcare? You should have, I believe statements at all times, ready to go. If you're the CEO of a company, you should know what you believe about the market. , you may be wrong.
You may want to have those vetted by as many people as you possibly can get feedback, be open to feedback, be open to being wrong. , maybe, I'm saying the, , chip shortage will, will last until we, , bring a manufacturing local and you might talk to a professor or somebody else who says, no, that's not the case.
These supply lines are gonna come back up and globalization's gonna take hold again, and we're going to be fine. I don't believe that, but maybe somebody else has a good case to make for why that's going to happen. And you can plan based on that assumption or that set of I believe statements, but that should form your, I believe statement.
I believe the chip shortage will abate in the next two years, we'll go back to a globalized economy and that the supply chains will be back to normal. Again, the higher up you are in an organization. If you're a VP, if you're a CIO, , especially if you're a CEO. , you should have a set of, of core beliefs about what's going on in your community, in your hospital. What's going to be important and it should drive your behavior.
Alright. I hate to shoot on you like that, but it is so important when people say, well, we didn't see this coming. We don't see it coming a lot of times because we don't take the time to step back from our day to day and really look at the macro trends that are going on and how they're going to impact us in two years.
And I believe that's part of what being a leader is
and leaders, as I heard Jack Welsh, say one time. , the leaders that can see around the corners are the best leaders that there are. And not many people can, but to be honest with you with a little discipline of setting aside some time and looking at what's going on. You can be one of those leaders that sees around the corner, that's all for today. If you know someone that might benefit from our channel, please forward them a note. They can subscribe on our website this week health.
Dot com or wherever you listen to podcasts, apple, Google, overcast, Spotify, Stitcher. You get the picture. We are everywhere. We want to thank our channel sponsors who are investing in our mission to develop the next generation of health leaders, Gordian dynamics, Quill health tau site nuance, Canon medical, and 📍 current health. Check them out at this week. health.com/today.