Healthcare players will gain from reallocating resources

As healthcare costs rise and the industry is under pressure to adapt to the new normal, distribution of constrained resources is the dealmaker. How effectively a healthcare entity can implement this job will determine its success or stagnation.

The world’s population rose, and lifestyle diseases became the norm, but healthcare continued to evolve unhurriedly until the pandemic struck. The jolt led to a barrage of pressures on the healthcare industry, forcing it to introspect. Factors such as demand patterns, medical technology advancements, consumer expectations, purchasing power, access to healthcare resources, and financing mechanisms are shining a harsh light on outdated processes, revealing the gaps in the industry’s progress.

Underpinning these factors is resource availability, a problem endemic to healthcare. Many companies face a resource crunch even as costs rise, creating affordability challenges. Compounding the problem is a poor understanding of resource distribution. Resource crunch and resource distribution are two sides of a coin. When funds are finite, the key to maximizing their impact is reallocation. Every buck goes the longest distance when a company balances availability and reallocation.

The importance of reallocating resources is greater during challenging times, and research shows companies that redistribute resources aggressively perform better than their counterparts who do not. It’s about pace, and many organizations are slow, frittering away the benefits of speed and precision. An effective reallocation program uses a tested portfolio of processes to seed high-growth areas while avoiding reduction in the core business.

Identifying pain points of resources

How revealing is your resource route map? Are the red paths (resource crunch) longer than the green routes (resource redistribution)? It is a critical indicator of where the company is going. To spot the bleeds or stagnation points, companies must evaluate every step in the healthcare delivery process.

Streamlining resources involves technical, allocative, and economic efficiency analysis. If an organization’s systems and processes are interdependent and share resources, eliminating bottlenecks or overlaps can significantly reduce waste. Every system’s capacity is based on resource availability, so efficiency improvement is critical to boosting overall capacity. 

Personnel resources are a high-cost area, yet their capacity is rarely adequately analyzed by companies. Amidst the growing discussion on staff shortages in healthcare, particularly among physicians and nurses, the personnel issue is paramount to cost efficiency. If not done correctly, it can cripple a healthcare entity’s productivity.

The following actions will help healthcare providers grow despite resource constraints:

Technical and allocative efficiency

Improvements in technical and allocative efficiency heighten overall efficiency. It is not rocket science but plain logic.

Doing things accurately in the least possible time using the correct number of resources, whether in diagnostics, treatments, or processes including billing, claims, and supply chain efficiency leads to an efficient technical pipeline.

What tilts the scales in favor of technical efficiency?

When a healthcare company correctly uses its resources to create the desired health outcomes and gain the trust of its patients.

However, poor technical efficiency results in impaired allocative efficiency. Patients do not receive the desired quality of treatment and experience because the resources are not employed in the right place at the right time.

Clear capital allocation

An essential precaution in resource allocation is the flexibility of capital. Successful reallocators assign the use of a clean sheet and not an incremental approach to identify the minimum maintenance capital required to sustain the core business.

Dynamic budgeting

Budgets should be fluid, not solid and immovable. Organizations can act quicker when markets change, or new opportunities arise with a malleable budget. To avoid rubber-stamping the same allocations every year, companies must free budgets of anchors and, in tandem, terminate underperforming projects. The two are interlinked, and if you do not implement the latter, it can constrain the former.

Align talent to value

Talent harvesting must align with growth areas. Technology and digital nativism have transformed consumers’ relationship with health, and healthcare entities must strive to be at the core of this transformation, not on its margins. There are many new growth areas, and all are concomitant with fundamental health needs. Ambulatory surgery centers, bedside imaging, home care, behavioral health, digital therapeutics, and more are expanding healthcare horizons. The talent-to-value ratio is a critical component of future readiness.


A critical factor in a company’s transformation is its resources. As healthcare costs rise and the industry is under pressure to adapt to the new normal, distribution of constrained resources is the dealmaker. How effectively a healthcare entity can implement this job will determine its success or stagnation.

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