Ep. 031 Stop Funding Chaos: How Organizations Pay for Emergencies and Ignore Prevention

Speaker 1 Welcome back to Bread to Lead, episode 31, Season 3.

Speaker 1 Last week, we talked about why hospitals shouldn't have to rent stability, the traveler dependency crisis, the hidden costs that don't show up on budget reports.

Speaker 1 This week, we're going deeper because here's the pattern that we've seen in 20 years of healthcare consulting that I've seen as a corporate fixer for more than a decade.

Speaker 1 Hospitals will spend millions to stop bleeding, and organizations will as well.

Speaker 1 But they won't spend thousands to prevent the wound. We fund chaos.
We starve prevention. And we call it fiscal responsibility.

Speaker 1 Today, we're exposing the trauma budget, the way healthcare financing rewards crisis management and punishes strategic planning. Because leadership is the software.
Systems are the hardware.

Speaker 1 And if your budget only funds emergencies, you'll never build anything that lasts.

Speaker 1 And that's the favour my famous words before we jump off any amazing podcast. Let's go.

Speaker 1 Welcome back, Bridge Builders. Welcome back.
Welcome back. Welcome back.
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Speaker 1 So, listen, we're jumping right into our next segment, our first segment, or segment one, which is we're talking about the crisis economy.

Speaker 1 And here's how most hospital budgets work: okay, a unit is short-staffed, patient satisfaction scores drop. Safety incidents rise.
The CEO gets nervous.

Speaker 1 Suddenly there's money to fill in for emergency staffing agencies. And they get called.
Premium rates get approved. Bonuses get offered.
Whatever it takes to stop the immediate crisis.

Speaker 1 The budget was too tight for raises six months ago, but it magically opens up when things are on fire. And I just want to tell, I want to tell you something.
I want to be honest.

Speaker 1 Staffing historically has was the makeup of SIPS for 20 years.

Speaker 1 Now we're in the space where we're providing frameworks and systems and technology to help hospital systems be interdependent on themselves so they don't have to be so dependent on staffing.

Speaker 1 But it's a cycle that we see over and over again.

Speaker 1 And coming in new to this industry, my first 18 months, I spent time reading every case study and personally talking to more than 250 leaders in this space about the problems that they're having and the fires that they're dealing with.

Speaker 1 And all of the cadences and all the stories the same.

Speaker 1 And

Speaker 1 I know it looks good on the budget to act as if the emergency traveler eco-space will just suddenly disappear.

Speaker 1 But taking it off the ledger, putting it on the ledger, just a matter of funny business with funny numbers, what we call it in finance, versus actually building the business of the hospital system.

Speaker 1 We're living in a space right now where the ecosystem, the marketplace is looking for leaders who know how to run profitable organizations, regardless of if they are in healthcare or not.

Speaker 1 And that's the problem that we see.

Speaker 1 When the fire goes up and bonuses are being threatened and we have to find the solution because there's this trickle effect where now when it's affecting the budget or the reputation of the hospital, now we're going to fix it and have to spend more money to fix it versus raising the budgets as they currently stand.

Speaker 1 And it's easier to to think about a term, a temporary compensation for added support that lasts maybe longer, but you can justify that in your board or in your in your committee meetings that it's only for 13 or 26 weeks.

Speaker 1 You can just keep incurring that cost or just keep pushing it off. And I know the fear that hospitals have giving these raises and having these raises given.

Speaker 1 And then within the raises given or whatever the process is, we say, hey, now we're stuck with this budget. Even if it goes down, the hospital struggles.
But this is something we have to think about.

Speaker 1 If we want more cases and more surgeries, we have to make sure our people are paid justly, which also takes into

Speaker 1 the simple fact that if you don't want to put it in your regular budget, how about you add it to performance?

Speaker 1 Have some type of performance metric, end of the year quarter, or something that you can add that can give value there.

Speaker 1 And if not, you can outsource the full department and allow your outsourcing outsourcing partner to actually do those things, i.e. SIPS healthcare, if that's what you're looking for.

Speaker 1 But when you bring in interim staff, they come in, they support, they fill the hole. Yes, they get funding, but let me tell you what doesn't get funding.

Speaker 1 Leadership development and what would have prevented the turnover. Workflow redesign that would have reduced the burnout.
Succession planning.

Speaker 1 that would have built internal bench strength for when someone leaves, that next person's ready to step up. The culture initiatives that would have kept people engaged.
None of that gets

Speaker 1 approved. Why? Because these are nice to haves.

Speaker 1 It's not urgent. Because the ROI is hard to measure.
So we wait. We watch the warning signs.
We ignore the small fires until they become big infernos.

Speaker 1 And then we spend 10 times more putting out the blaze than we would have spent installing sprinklers. This isn't budgeting.
This is organized negligence.

Speaker 1 And the CFOs who pride themselves on controlling costs, they're the ones bleeding the most money. They just don't see it until it's too late.
And this is something that we have to fix.

Speaker 1 Because now we're going into the prevention tax. And let me tell you about a periop director I worked with last year.

Speaker 1 We'll call this person Barney. Barney saw the staffing crisis coming.
Barney's senior scrub techs were burning out, and their instrument processing department was running on duct tape and prayer.

Speaker 1 Her orientation program hadn't been updated in a decade. And they built a proposal, a comprehensive plan to redesign workflows, upgrade training systems, and create sustainable staffing models.

Speaker 1 The total cost was $300,000 over two years. She presented it to her executive team with data, projected retention savings, reduced overtime, fewer errors, better outcomes.

Speaker 1 The answer was, we don't have the budget for that right now. Six months later, that a mass exodus, eight people quit in three weeks.

Speaker 1 The hospital spent over a million dollars in the next year on agency staff overtime, signing bonuses, and recruiting fees.

Speaker 1 Not to mention the cost of delayed surgeries and the cost of onboarding new people who didn't know the system,

Speaker 1 the cost of remaining staff working themselves to exhaustion. Barney's prevention plan would have cost $300,000.
The crisis costs over a million. And here's the kicker.
Barney left too.

Speaker 1 They went to a hospital that actually invests in infrastructure. That's the prevention tax.
The price we pay for refusing to invest in what actually works because we're too busy funding chaos.

Speaker 1 And here's the signature cost.

Speaker 1 The hardware slash

Speaker 1 software check

Speaker 1 and how it affects your department. Let's diagnose trauma budget.
The hardware problems. Budget cycles that don't align with strategic planning timelines.

Speaker 1 Financial systems that don't track expenses, but

Speaker 1 not opportunity costs, capital approval processes designed for equipment, not infrastructure, accounting categories that make prevention spending look like overhead instead of investment.

Speaker 1 The software problems are leaders who learn to manage by crisis and can't break the pattern. CFOs who measure cost control but not value creation.
Executives who confuse activity with progress.

Speaker 1 Cultures that reward firefighting more than fire prevention. Do you see the disconnect? Our financial hardware is built for manufacturing economy.
buy machines, buy widgets, count output.

Speaker 1 But healthcare isn't widgets. It's people, systems, relationships, knowledge.
And our leadership software is still running on trauma response mode.

Speaker 1 We've trained an entire generation of healthcare leaders to be really good at crisis management, heroic even. But heroism is what you need when systems fail.

Speaker 1 And if you need heroes every single day, your systems are broken. The hardware question, does our financial infrastructure actually allow us to invest in prevention?

Speaker 1 The software question is, do our leaders know how to make the case for it? And most hospitals fail at both checks. So we have to understand.

Speaker 1 Let's actually talk about the return on investment in these areas that are considered not important. Because this is where prevention gets killed.

Speaker 1 Some executives ask, what's the ROI on culture building? Or how do we measure the impact of leadership development?

Speaker 1 And the advocate typically stumbles and because these things are harder to quantify than a new MRI machine.

Speaker 1 And here's what 20 years in the industry has taught our company and over a decade of corporate fixing has taught me. Everything has an ROI.
You're just measuring the wrong things.

Speaker 1 Let me give you a framework. When you invest in prevention, real infrastructure, not band-aids, Here's what you're buying.
Retention.

Speaker 1 Every person who doesn't quit is thousands in recruiting savings, weeks of lost productivity that you don't lose, and institutional knowledge that you keep that has a financial value. Efficiency.

Speaker 1 Systems that work

Speaker 1 right the first time cost less than systems that break and get fixed repeatedly. Innovation.
People aren't in constant crisis mode.

Speaker 1 They have the bandwidth to improve things, to solve problems, problems, to think.

Speaker 1 Reputation. Hospitals known for stability attract better talent.
They don't have to pay crisis premiums, outcomes. Consistent team deliver better patient care, period.
So we look at all these things.

Speaker 1 Here's the formula CFOs need to understand.

Speaker 1 The cost of prevention is visible and upfront. The cost of crisis is hidden and compounding.
You see $300,000 investment.

Speaker 1 You don't see $5 million in cumulative losses from turnover, inefficiency errors, and opportunity costs over five years. This is exactly why we built Stiraby Design.

Speaker 1 Because after two decades of watching perioperative departments cycle through the same crisis, we realized the problem wasn't lack of resources.

Speaker 1 It was the lack of infrastructure to deploy those resources strategically. Stiraby Design gives you the operational framework to make prevention measurable, systematic, and sustainable.

Speaker 1 We're talking about competency matrices that reduce training times and error, workflow protocols that eliminate waste, quality systems that catch problems before they cascade, leadership pipelines that ensure you're never one resignation away from chaos.

Speaker 1 And here's the thing. Every single component has measurable ROI.
because we built it that way. We got tired of watching good ideas die in budget meetings because leaders couldn't quantify the impact.

Speaker 1 So we made prevention quantifiable.

Speaker 1 So we talk about redesigning this budget. We've had enough time with the

Speaker 1 diagnosis. Now let's focus on the design.
What would a prevention-focused budget actually look like?

Speaker 1 First,

Speaker 1 separate strategic investment. from operational expense.
Stop making infrastructure compete with supply and utilities. Create a dedicated line for building capacity, not just maintaining operations.

Speaker 1 Second, measure what matters. Track turnover costs.
Calculate the true expense of vacancies. Quantify the impact of

Speaker 1 inefficient workflows. Make the invisible visible.
Third, extend your timeline. Most budgets are annual, but building infrastructure takes years.

Speaker 1 Create multi-year funding commitments for strategic initiatives so they don't get cut every budget cycle. Fourth, flip the approval process.
Instead of asking, can we afford to invest in this?

Speaker 1 Ask, can we afford not to? Make leaders justify why they're choosing crisis spending over prevention spending. Put the burden of proof where it belongs.
Fifth, reward prevention.

Speaker 1 When a leader successfully prevents a crisis through good planning, celebrate it. Promote them.
Bonus them. Right now, we promote the heroes who save the day.

Speaker 1 We need to start promoting the designers who make sure the day doesn't need to be saved. This isn't radical.

Speaker 1 It's just unusual in healthcare because we've been stuck in trauma response mode so long, we've forgotten what proactive design looks like. And that's the beauty of technology.

Speaker 1 Technology allows for the prevention of mistakes before they happen. It's coded in the DNA of the AI, the technology, the operational frameworks.
And we think about how humans are the first computers.

Speaker 1 Why can't we code our environments to operate the same exact way? Here's the truth that we need to face. The trauma budget isn't just a finance problem.
It's a leadership crisis.

Speaker 1 We built a system that only responds to pain, that only acts when forced, that makes urgency, that mistakes urgency for importance.

Speaker 1 And we've trained leaders to operate inside that system instead of redesigning it.

Speaker 1 But here's what I know after more than a decade of corporate turnaround, more than 20 years of this company's case studies and data points.

Speaker 1 The hospitals that break out, the organizations that break out of this cycle, the ones that commit to building real infrastructure, they don't just survive. They dominate.

Speaker 1 They become magnets for talent, destinations for patients, models for the industry, not because they spend more. because they spend smarter.
They fund prevention. They build systems.

Speaker 1 They design for the the long term. And yes, they use frameworks like Stirby Design because they understand that infrastructure isn't an expense.
It's a competitive advantage.

Speaker 1 Leadership is the software. Systems are the hardware.
And your budget, your budget is the blueprint. So here's your challenge this week.
Leaders, pull your last three years of financial reports.

Speaker 1 Calculate what you spent on crisis response. And if you're not a leader at work, do this personally.

Speaker 1 Then ask yourself, what could we have prevented when 10% of that investment went to the areas it's supposed to?

Speaker 1 Aspiring leaders, start tracking the hidden costs of your department or home, the overtime, the turnover, the rework. Build the business case for prevention before the next crisis hit.

Speaker 1 And CFOs, stop asking what's the ROI on culture. Start asking what's the cost of not having one.
Because the hospitals funding prevention today are the ones that won't need bailouts tomorrow.

Speaker 1 I'm your host, Dr. J.
Taylor Jacobs. This is Bread to Lead, episode 31, Season 3.
Next week, we're going to be talking about the leadership famine while healthcare promotes the wrong people.

Speaker 1 Remember, We have exclusive masterclass content this season you won't want to miss. Head to bread2lead.com to join our community and get access.

Speaker 1 Subscribe, share this with a CFO who needs to hear it, and let's start building budgets that build the future. And lastly, please lastly,

Speaker 1 you can't build an organization that requires people and don't think about the playbook, the system that those people need to operate on.

Speaker 1 If you need help with that, we can help. I love you.

Speaker 1 And there's absolutely nothing you can do about it stay tuned for the episodes that we have coming up because we're going to be talking about the masterclasses that we have coming up in the near future this is dr j taylor jacobs with bread to lead thank you for making us the top 10 business podcast in the country let's keep climbing to the top and bridge builders keep being the bridge that connects the people because that's what we need Because healthcare, business, organization, the service of business is about pushing people forward and connecting people to what they really need.

Speaker 1 And that's our overall goal, being bridge builders in today's world. Talk to you later.