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The other ‘T’ word on business leaders’ minds…

14 February 2017

The Business media seems to be stuck in a seemingly never-ending feedback loop at present. One cannot read an article or watch a television news item without being faced with endless speculation about the ‘B’ word (the UK’s forthcoming ‘messy divorce’), or the ‘T’ word (the chap now taking residence in the White House). Ever the contrarian, I’m going to attempt to write an entire ‘state of the market’ article without making reference to either. There is another word which I have been hearing almost endlessly over the past few months and I have decided to focus on that instead. The word in question is ‘Transformation’.

In the five years that I have spent engrossing myself in the independent health sector, there have been a handful of undeniable trends in the interim skill sets which clients have asked me to provide. The first trend was for Governance, Risk and Safety experts. At the time, CQC was ramping up its new inspection regime; Winterbourne View was still fresh in people’s minds and the Francis Report on the Mid Staffs scandal was hot off the press. Interims specialising in clinical governance were in significant demand, to ensure that the sector was prepared for the increased scrutiny which was to come.

Perhaps less predictably, the next trend was towards experienced interim HR professionals. The main reason for this is in hindsight rather obvious - the independent health sector has traditionally been woeful when it comes to human resources, staff retention and people management. Particularly within the social care sector, staff turnover rates of 60% or 70% (or even higher) are not unheard of and these organisations are not in the financial position to offer massive wage increases above and beyond the mandated National Living Wage. With the role of HR in the sector having often been limited to that of the ‘Personnel Manager’ in the past, we began to see an influx of Board-savvy Interim HR Directors, Learning & Development and OD professionals. These interims were tasked with looking at more innovative ways to improve staff retention and succession planning. With the sector being as small and inward-looking as it so often is, such innovation is welcome and will hopefully encourage a greater level of staff engagement across the board.

In the last few months, it has become clear that Business Transformation is the ‘next big thing’ in the sector and I have a few thoughts as to why. When speaking with clients in the social care space, the ongoing local authority funding crisis perhaps unsurprisingly appears responsible for the need to transform. Although the Government is beginning to make noises about tackling the crisis, it is clear that no major additional funding will be immediately forthcoming and businesses will therefore need to be ready to ‘do more with less’ and are putting together transformation programmes with a view to ‘right-sizing’ their back office functions and realising cost efficiencies that way.

Private hospital groups are also feeling the pinch, albeit for different reasons. Several of the major hospital groups have geared their operations to rely heavily on performing elective surgery on behalf of the NHS. With NHS funding also in severe trouble, many Trusts are allowing their waiting lists to grow, instead of referring patients to the independent sector. In addition, many patients travelling from the Middle East for treatment are suffering the financial effects of lower oil prices and are having their heads turned by more competitively-priced NHS Private Patient Units. Spire Healthcare’s latest profit warning predicted a fairly static 2017 for the group and they are by no means the only provider feeling this pressure. Several of the major operators have given me the same message – we need to transform and begin working more efficiently in order to maintain our profit margins.

Finally, there has been a huge shake-up in the Mental Health space of late. The Priory/PiC and Cygnet/Cambian mergers, coupled with the creation of Elysium Healthcare (and one or two other rumoured new entrants), will require organisational transformation on a vast scale. Whilst not necessarily under the same financial pressures as their peers in the elderly care space, these organisations are going through periods of change which would challenge any business and stretch its ‘business as usual’ staff to the limits.

It should go without saying that Odgers Interim is well-placed to assist with staffing transformation and change programmes. Such roles are best undertaken by seasoned interim professionals, who can deliver change effectively and then move on when the job is done. As with previous hiring trends, we have invested time and effort in gearing our networks to ensure that we are in a prime position to respond to the broader challenges facing the sector. The best-prepared healthcare businesses will emerge from these uncertain times in an excellent position to grow market share and maximise margins.

And if that wasn’t enough to consider… there’s always Brexit and Trump to worry about.

Dan Kiely, Consultant

Dan Kiely is a Consultant within the Private Healthcare sector at Odgers Interim


Categories: Healthcare

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