Cinderella 2006

It is interesting that events we generally pay no attention to can suddenly capture our attention. I have never been very interested in college basketball, but March Madness certainly captured my attention this year. Why? The Cinderella Story. We all seem to like them.

The Cinderella in this case was George Mason University. “Who are they?” is what much of America asked. “How could they be in the Final Four?” Once the news media told us they were a small school battling giants like LSU, UCLA, Florida and Duke, we wanted to see them win. They became a Cinderella.

When the sportscasters interviewed Jim Larranaga, the George Mason coach, he revealed a really powerful principle he taught his team: It is 10 percent about the situation you are in and 90 percent about how you react to it. This principle is one that home care providers need to recall over and over again.

The situation our industry is in is unprecedented. The survival of many providers is threatened by the implementation of the Medicare Modernization Act. Yet it is 10 percent about the situation and 90 percent about our reaction to it.

So, what is the right reaction? Embrace the MMA as good public health and/or fiscal policy? Sell the business before it is too late? Wait to see how it all shakes out? These might be valid options for a few but, first, try the following five techniques.

1. Relax Not being relaxed makes us emotional. Being emotional keeps us from being logical. Imagine being in an airplane in turbulent air with a pilot who is freaking out. Could you be confident that he or she will make the best decision? We know that the pilot must have a calm, steady hand on the controls. Providers should, too.
2. Evaluate Knowing that the situation the industry is in will cause lower profitability is not enough. Every provider must evaluate the specific effects on his own company. How much will revenues, profits and cash flows change? How will rivals react? How will their reaction affect us? How will manufacturers react? The evaluation should quantify every material fact and assumption. It is only after a situation is measured that an appropriate response can be planned. Responding to this industry’s current situation without evaluating and quantifying its effect on your individual company is about the same as buying a car without knowing anything about it.
3. Plan George Mason planned a response to every team they met along the way to the Final Four. They knew which man would make which move and at what rhythm. They knew what they would do if the opponent responded differently than anticipated. We could call it a contingency plan. It is not good enough only to say, “We will have a positive attitude about the situation.” Providers’ plans must include two critical strategies: grow sales and improve productivity. The incremental profit on the next sale is better than the average profit of all recent sales, so this strategy should raise profitability. Productivity improvement is the most powerful strategy that providers can employ because it reduces costs as a percent of sales.
4. Concentrate When executing the planned response, we can’t be distracted by how well or how poorly our plan is working. Athletes call it “being in the zone.” When businesses are in the zone, they bring in the best customer, not the next customer. They cut their losses quickly and move on. Their attention is on the moment — not the last victory or the next move, just the moment.
5. Flex Keep in mind that your plan will not always work as intended. Home care companies must be able to adjust quickly. The key to quick adjustments is having determined in advance what your response will be and how it will be applied. This is why contingency plans are developed early on. Knowing how to react facilitates speed and confidence.

HME providers who use these techniques to respond to the situation — for both current and coming challenges — will be those who garner positions among the giants.

Wallace Weeks is founder and president of Weeks Group Inc., a Melbourne, Fla.-based strategy consulting firm. He can be reached at 321/752-4514 or by e-mail at [email protected].