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Chairman's Post: Insights on Last Week's Poll - Doing Due Diligence
Last week's poll results: Only thirty four (34) percent of our hospital respondents say that their hospital has a due diligence tool that adequately meets their needs.
Sometimes it’s the simplest things that waste the most management time.
As a consultant to the industry for over three decades, I continue to be amazed when – over the years – clients would ask for tools like business plan formats, due diligence checklists and so on. These ought to be Standard Operating Procedures (SOP) within the institutions. Managers at all levels are constantly being asked to develop business plans, or are involved in expensive equipment acquisitions, or may be involved in strategic relationships if they are at a more senior executive level. The number of situations in which a due diligence tool can be helpful is almost endless. And when you look inside some institutions, each time a business plan/due diligence is needed, the manager spends and wastes a great deal of time reinventing the model.
A due diligence tool is a detailed checklist to help a manager both think through the issues that will be involved in a particular decision and to make sure each appropriate issue has been addressed. The value is in having all the categories and components thought about in advance. This insures comprehensiveness, but also means that the manager can add additional factors that are directly related to the matter at hand.
Attorneys, of course, have legal transaction due diligence tools ( i.e., are the corporate documents in order?) Accountants, the same for financial transactions.
But when it comes to the business and management issues, the process tends to fall woefully short. Hospitals tend to look to consultants, at a pretty high expense, for a business application due diligence tool. But, Consultants are more C-Suite focused. In the trenches, Managers (far too frequently) just flounder and use their time and energy to create something new.
What a shame.
Hospitals should have a standard approach that the managers and execs can use that is complete, but somewhat generic. Pull out the sections that don’t apply to the particular situation and make yourself really address the topics that are important in the situation. Add new items that are unique to the situation. In my experience, 80% of the items on a good due diligence tool will need to be addressed regardless.
Hospitals would save a lot of time and money with these simple tools – and the decision making can only be better. If hospitals use a standard due diligence, instead of wasting time making sure all the information is there, the executives can discuss the strategic implication of the decision.
Let me know if your health system has an effective tool and how you use it.