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

0:00Welcome back to Bread to Lead Episode 31 Season 3. 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. This week, we're going deeper because here's the pattern that we've seen in 20 years of health care consulting that I've seen as a corporate fixer for more than a decade. Hospitals will spend millions to stop bleeding and organizations will as well, but they won't spend thousands to prevent the wound. We fund chaos. We starve prevention. We call it fiscal responsibility. Today, we're exposing the trauma budget the way health care financing rewards crisis management and punishes strategic planning because leadership is the software.

0:50Systems are the hardware. And if your budget only funds emergencies, you'll never build anything that last. That's the famous my famous words before we jump off any amazing podcast. Let's go.

1:19welcome back bridge builders welcome back welcome back welcome back listen we talked about a whole lot of things last week and this is season three i'm excited we are ranked top eight in the country right now for the business category. And I want you to keep letting the world know who your favorite podcast is. If you have not tuned in yet and you have not subscribed, please subscribe to our podcast, Bread to Lead. We're excited about where we're ranked. We're excited about everyone deciding to work with us. And if you can't tell here, we're number eight, baby. I'm excited about that. So please like, subscribe, share.

2:03If you're new to this podcast, we are we call us up a pod class. The whole purpose of this podcast is not just to entertain you, is to edutain you, give you things that you can use in your everyday work life and becoming growing and optimizing as a leader in this space that we call life. this space that we call business, but more specifically, if you are in health care, if you're not in health care, you listen to this podcast right now, I want you to know there are lots of nuggets that you will be able to get on this show that you can apply to any endeavor or any segment in your life. But most importantly, this season, this season, we will have guests that will be teaching amazing masterclasses about how to get the edge.

2:44This year, we will be bringing on thought leaders of how to transform your mind, leadership, fine tuning things, how to note take. We will be bringing in executives of hospital systems who are running them. We'll be bringing in medical and healthcare entrepreneurs on nuggets of innovation. And we'll be bringing on innovators, creators, developers, scientists, if you will, into this ethos of bread to lead because leadership looks amazing in many different ways. So listen, we're jumping in right into our next segment, our first segment, our segment one, which is we're talking about the crisis economy.

3:22And here's how most hospital budgets work, okay? A unit is short-staffed, patient satisfaction scores drop, safety incidents rise, the CEO gets nervous, suddenly there's money to fill in for emergency staffing agencies. They get called. Premium rates get approved. Bonuses get offered. Whatever it takes to stop the immediate crisis. 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 us I want to tell you something. I want to be honest. Staffing historically has was the makeup of SIPs for 20 years. Now we're in the space where we're providing frameworks and systems and technology to help hospital systems be interdependent on themselves.

4:12So they don't have to be so dependent on staffing. But it's a cycle that we see over and over again. 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 and all of the cadences and all those stories the same. And I know it looks good on the budget to act as if the emergency traveler ecospace will just suddenly disappear. 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.

4:53We'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 health care or not. And that's the problem that we see when when the fire goes up and bonuses are 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. And it's easier to think about a term, a temporary compensation for added support that lasts maybe longer.

5:36But you can you can justify that in your board or in your in your committee meetings that it's only for 13 to 26 weeks. 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. 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. If we want more cases and more surgeries, we have to make sure our people are paid justly, which also takes into the simple fact that if you don't want to put it in your regular budget, how about you add it to performance?

6:19Have some type of performance metric, end of the year, quarter, or something that you can add that can give value there. And if not, you can outsource the full department and allow your outsourcing partner to actually do those things, i.e. SIPP's healthcare, if that's what you're looking for. 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. Leadership development and what would have prevented the turnover. Workflow redesign that would have reduced the burnout. Succession planning that would have built internal bench strength for when someone leaves, that next person's ready to step up.

7:01The culture initiatives that would have kept people engaged. None of that gets approved. Why? Because these are nice to have. 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. 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. 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.

7:46Because now we're going into the prevention tax. And let me tell you about a peri-op director I worked with last year. 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. 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. The total cost was$300 ,000 over two years. She presented it to her executive team with data projected retention savings, reduce overtime, fewer errors, better outcomes.

8:36The answer was we don't have the budget for that right now. Six months later, that amassed exodus. Eight people quit in three weeks. The hospital spent over a million dollars in the next year on agency staff, overtime, signing bonuses and recruiting fees. not to mention the cost of delayed surgeries and the cost of onboarding new people who didn't know the system the cost of remaining staff working themselves to exhaustion barney's prevention plan would have cost three hundred thousand dollars the crisis costs over a million and here's the kicker barney left too they went to a hospital that actually invest 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.

9:31And here's the signature cost, the hardware slash software check, and how it affects your department. Let's diagnose trauma budget, the hardware problems, budget cycles that don't align with strategic planning timelines, financial systems that don't track expenses, but not opportunity costs, capital approval processes designed for equipment, not infrastructure, accounting categories that make prevention spending look like overhead instead of investment. 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.

10:16Executives who confuse activity with progress. 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. But healthcare isn't widgets. It's people, systems, relationships, knowledge. And our leadership software is still running on trauma response mode. 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. And if you need heroes every single day, your systems are broken.

10:59The hardware question, does our financial infrastructure actually allow us to invest in prevention? 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, let's actually talk about the return on investment in these areas that are considered not important, because this is where prevention gets killed. Some executives ask, what's the ROI on culture building? Or how do we measure the impact of leadership development? And the advocate typically stumbles. And because these things are harder to quantify than a new MRI machine.

11:38And 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. Let me give you a framework. When you invest in prevention, real infrastructure, not Band-Aids, here's what you're buying. Retention. 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, systems that work right the first time cost less than systems that break and get fixed repeatedly.

12:23Innovation, people aren't in constant crisis mode. They have the bandwidth to improve things, to solve problems, to think. Reputation, hospitals known for stability ability 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. Here's the formula CFOs need to understand. The cost of prevention is visible and upfront. The cost of crisis is hidden and compounded. You see$300 ,000 investment. You don't see$5 million in cumulative losses from turnover, inefficiency errors and opportunity costs over five years.

13:04This is exactly why we built Stirl by Design, because after two decades of watching perioperative departments cycle through the same crisis, we realized the problem wasn't lack of resources. It was the lack of infrastructure to deploy those resources strategically. Stereo by Design gives you the operational framework to make prevention measurable, systematic and sustainable. 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.

13:50Here's the thing. Every single component has a 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. So we made prevention quantifiable. So we talk about redesigning this budget. We've had enough time with the diagnosis. Now let's focus on the design. What would a prevention focused budget actually look like? First, 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.

14:35Second, measure what matters. Track turnover costs. Calculate the true expense of vacancies. Quantify the impact of inefficient workflows. Make the invisible visible. Third, extend your timeline. Most budgets are annual, but building infrastructure takes years. 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? 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.

15:18Fifth, reward prevention. 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. We need to start promoting the designers who make sure the day doesn't need to be saved. This isn't radical. 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. Technology allows for the prevention of mistakes before they happen. It's coded in the DNA of the AI, the technology, the operational frameworks.

15:56And we think about how humans are the first computers. 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. We built a system that only responds to pain, that only acts when forced, that makes urgency, that mistakes urgency for importance. And we've trained leaders to operate inside that system instead of redesigning it. 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. 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.

16:46They 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. They design for the long term. Yes, they use frameworks like Stirr by Design because they understand that infrastructure isn't an expense. It's a competitive advantage. 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. Calculate what you spent on crisis response. And if you're not a leader at work, do this personally.

17:31Then ask yourself, what could we have prevented when 10 % of that investment went to the areas it's supposed to? 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. 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. I'm your host, Dr. Jake Taylor Jacobs. This is Bread to Lead, episode 31, season three. Next week, we're gonna be talking about the leadership famine while healthcare promotes the wrong people.

18:21Remember, we have exclusive masterclass content this season you won't want to miss. Head to breadtolead.com to join our community and get access. 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, 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. If you need help with that, we can help. I love you. 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.

19:09This is Dr. J. Taylor Jacobs with Bread to Lead. Thank you for making us the top 10 business podcasts 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 health care, business, organization, the service of business is about pushing people forward and connecting people to what they really need. And that's our overall goal being bridge builders in today's world. Talk to you later.