I recently had the pleasure of attending the CompelCEOs Economic Summit featuring world renowned economist, Alan Beaulieu of the Institute for Trend Research. For those of you who are not familiar with Alan’s work, he has made it his life’s ambition to discover economic trends that impact recessions and depressions in order to provide practical solutions for businesses to prepare and thrive during economic downturns.
As I sat listening to his engaging presentation (yes, I know it’s an economic discussion about downturns – how is that possible), it became increasingly clear that the writing was on the wall for a recession in 2019 followed by a great depression in 2030. I left the Summit considering how I could use this information to help my family, friends, employees, and clients. For the latter, I decided to write a 2 part blog post to provoke thought and discussion that may help us all thrive in the coming economic downturn.
For the purposes of this blog post, I will focus on what I learned regarding 2019, and how Pathology businesses can gear up NOW to combat this coming recession. I will also apply these lessons to the current downturn related to the reduction in reimbursements related to 88305, to show why now is the time to invest in technologies that increase productivity and reduce labor costs.
The Business Climate
Alan is forecasting a more widespread economic downturn in 2019 that will impact the bottom line of most businesses. During this downturn, he is predicting that a rise in interest rates will lead to inflationary pressures that will increase labor costs. He says that companies who are very heavily reliant on labor will feel the most pain to their bottom line and will struggle to thrive during this period.Similarly, over the past year most pathology laboratories have experienced a decline in revenues related to 88305 reimbursement cuts. As a result, laboratories were left searching for additional sources of revenues and places to cut expenses in an increasingly competitive market.
The Impact of Human Nature
Most laboratories are stretched thin on resources, so exercising traditional cutbacks while keeping up with existing workloads was not a viable option. Many labs were paralyzed by the potential cut in revenues and sat on the fence waiting to measure the impact and hoping for the best .
While this is a natural human reaction in times of uncertainty, as leaders of our businesses, Alan tells us that we need to do the opposite. We need to make “gutsy” decisions while others doubt us, and we need to put “the pedal to the metal”.
Fortunately, the economic climate is still favorable for some of these decisions. Interest rates are still hovering around all-time record lows. In addition, the outlook for the economy is positive and Alan predicts that the economy will continue to grow over the next 4 years.
While interest rates are this low, cheap capital is available to invest in technology, automation, and training that improve worker efficiencies. Alan says that we should challenge ourselves to borrow as much money as possible to invest in these solutions, and be prepared to repay it before 2019.
By improving staff productivity with cheap money, we can streamline our organizations and mitigate the impact of inflationary wages and decreased revenues while the cost of capital is low. The companies who make these bold decisions now will not only start to reap the benefits in the short-term, but they will be in the best position to capture market share from those businesses struggling to remain profitable during the downturn.
In conclusion, we can’t afford to wait to invest in staff training, automation, and technology. While it is never an easy decision to spend money in the face of financial downturn, those companies who make these bold decisions will be in the best position to succeed in the face of a potential decrease in revenues.
Stay tuned for part 2 of this post, which discusses why I feel that the healthcare industry in general is one of the safest places to be as we approach the depression of 2030.