This year, the Collins English Dictionary named “permacrisis” the word of the year for 2022. Defined as “an extended period of instability and insecurity”, I think it is an apt choice.

The dictionary definition of prospection is “foresight and anticipation; the act of looking forward and providing for future wants”. For organizational leaders, prospection is the measure of the future-mindedness of a leader—the ability to envision the future possibilities of the organization while preparing for the roadblocks that may happen along the way. This leadership competency, prospection, is key to planning for future financial sustainability.

Mergers, acquisitions, and affiliations (MA&A) are all about scale—being big enough to be able to compete in any given market sector. That may be scale in terms of financial reserves, market share, unit costs, service line or payer diversification, or some other critical factor. But just ‘being big’ isn’t enough. It’s all about using MA&A as part of a strategic growth plan.

Pandemic-driven market forces are challenging the sustainable business models for specialty health and human service provider organizations, creating a more competitive environment with tighter margins, a need for more capital, and more pressure on value-based reimbursement (VBR).

Historically, there has been a perception in the health and human service world that organizational financial strength isn’t necessarily a key performance indicator. In an era of cost-based fee-for-service reimbursement with a large market share held by non-profit organizations and with minimal influence exerted by health plans, that was probably the case.

Consistency and stability have seemingly been lost over the last two years. Dramatic shifts in consumer preferences, new products, government funding, the pandemic, and health plans models of care have changed a relatively stable behavioral health market into a tumultuous and everchanging challenge for specialty provider organizations to remain a part of.

Ideally, every organization should be a ‘financial superball’. With financial strength and financial elasticity—the capacity to recover quickly from setbacks and keep going.

My recent meetings with board members of two different health systems (both non-profit) in two different states were unsettling. Both spoke about an unending sea of red ink (losing “tens of millions” each month).

An ongoing process for assessing financial strength is important for all organizations, particularly in the dynamic health care market. An organization that appeared to be growing and financially strong six months ago, may be facing the possibility of staff layoffs and financial crises today.

This presentation took place at The 2023 OPEN MINDS Performance Management Institute. This session focused on value-based payments in the nonprofit/behavioral health provider organization field, including realigning service portfolios, measuring for outcomes, attribution, etc.