The hospital switched into the strategy that had helped it avoid past financial difficulties: price reduction. But this time the strategy worked against the hospital. Having removed virtually all the fat from the organization, in desperation, the hospital was left with little to lower besides the muscle. To better handle expenditures, the hospital decreased surgical hours of operation, postponed needed investments in the expansion of surgical services, and postponed replenishment of surgical gear needed by a lot of its Clinica Iztacalco surgeons. This resulted in surgeons starting to take their patients elsewhere. Vital patient flow improvements to the emergency department (the significant source of admissions for the hospital) were postponed, and increasing overcrowding resulted in more individual walkouts and more frequent diversion of ambulance traffic to other associations.
Admissions diminished, exacerbating the fiscal crisis. Vendor payables were extended to the limit and the hospital started having problems receiving dispatch of necessary equipment. The hospital was in a traditional downward spiral. To stop the precipitous decrease, the favorite prescription for a sick clinic has been changed, and an entirely different regimen of investment and expansion has been implemented. Through a strategic mind-shift, direction took a new approach towards the situation.
Price cutting and layoffs were out, and focusing the residual capital of this institution on investment in expansion became the master game plan. Investments were made in staff and quality education, surgical and emergency services capacity, and in support lines which both fill a very important community health need and generate a positive bottom line donation. The hospital’s investment orientation, and its careful choice of key productive assets in which to invest, was the fulcrum about which a new team turned itself around and became an inspiration to its community, doctors and employees.