Strategies to roar out of a recession for private healthcare practices
The Economist reported last month that a global recession in 2023 is inevitable.
A few years ago, we conducted a poll asking practice owners how they would likely respond to a recession. The poll asked if you would:
- Develop new markets (i.e. invest in marketing and sales activity) – 47%
- Increase operational efficiency (cut costs, i.e. facilities, consumables, frills) – 26%
- Enlarge asset bases (invest in new equipment) – 16%
- Reduce labour cost (i.e. reducing hours or laying off staff) – 11%
The best response to a recession for private healthcare companies is a combination of three moves
A study reported in the Harvard Business Review (HBR) broke down the combination of these responses and revealed which firms performed best. They studied 4,700 public companies, breaking down the data into three periods: the three years before a recession, the three years after, and the recession years themselves. They found that a specific combination of offensive and defensive strategy resulted in a near doubling of results against rivals.
Two offensive strategies to beat a recession
The two offensive strategies are:
- Develop new markets (i.e. invest in marketing and sales activity)
- Enlarge asset bases (invest in new equipment)
One defensive strategy to outrun a recession
The one defensive strategy that will best complement the two above is:
- Increase operational efficiency (cut costs, i.e. facilities, consumables, frills)
Interestingly, the results of our poll had most respondents (72%) choosing the two offensive strategies, but less than 10% choosing the optimal combination of offence and defence suggested by the HBR study.
NOTE: The best way to answer that nagging question about practice growth or marketing or patient volume in the back of your mind is to book a free 15-minute compatibility call. Get some options and go away with a clear idea of what’s possible.
Summary table of the Harvard Business Review’s research into the best combination of strategic business moves in a recession
HBR called the combination resulting in the best top- and bottom-line results a ‘Progressive Focus’. Firms taking this approach outperformed their rivals on both top- and bottom-line growth.
HBR explains that “After a recession, progressive companies outperform pragmatic companies by almost four percentage points in sales and more than three percentage points in earnings before interest, taxes, depreciation, and amortization (EBITDA)—and do about twice as well as companies in general. (Percentages, which are adjusted for industry averages, refer to the three-year compound annual growth rate.)”
The four different approaches companies can take during a recession will yield very different results
- Prevention-focused companies, which make primarily defensive moves and are more concerned than their rivals with avoiding losses and minimizing downside risks.
- Promotion-focused companies, which invest more in offensive moves that provide upside benefits than their peers do.
- Pragmatic companies, which combine defensive and offensive moves.
- Progressive companies, which deploy the optimal combination of defence and offence.
The article goes into greater depth and shares several examples of companies that followed the four different approaches cited above.
In summary, when facing a global recession, you’d be wise to be ‘Progressive’ by pursuing a combined strategy of marketing more, expanding your asset base, and increasing efficiency. The last thing you want to do is cut labour costs.
As it happens in this case, what’s good for business is also good for the economy as a whole.
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About the author
Founder & Fractional CMO
Rod co-founded LiveseySolar and acts as a Fractional CMO for our customers. He’s on a mission to help transform the lives of 10,000 people through vision correction surgery by 2024. To achieve that, he inspires his customers to make confident decisions that will help 50,000 people take the first step towards vision correction.
Meet our Founders
Founder & Fractional CMO
Rod co-founded LiveseySolar and acts as a Fractional CMO for our customers. He’s on a mission to help transform the lives of 10,000 people with vision correction surgery by 2024. To achieve that, he inspires his customers to make confident decisions that will help 50,000 people take the first step towards vision correction.
LiveseySolar completely transformed the way we were approaching this… We’ve gone from having just the dream of having a practice to having a practice up and running with people making inquiries and booking for procedures… It’s extremely pleasing. We feel lucky we connected with LiveseySolar.
— Dr Matthew Russell, MBChB, FRANZCO, specialist ophthalmic surgeon and founder of VSON and OKKO
Founder & CEO
Laura Livesey is the co-founder & CEO of LiveseySolar. She has developed powerful refractive surgery marketing systems that increase patient volumes and profits for doctors, clinics, and hospitals, since 1997.
Rod and Laura know as much about marketing surgery to patients as I know about performing it. They are an expert in the field of laser eye surgery marketing. They know this industry inside out. I believe that they could help many companies in a variety of areas including marketing materials, sales training and marketing support for doctors.
— Prof. Dan Reinstein, MD MA FRSC DABO, founder of the London Vision Clinic, UK