The Best Airspace for Health Care Leaders

In Southwest Airlines CEO Flies Uncharted Skies March 25, The Wall Street Journal's Mike Esterl takes a look at how Southwest Airlines - the perennially successful low cost airline - plans to fly above the industry clouds. As you might expect, it's not by using strategies the other airlines use. What's interesting for health care leaders about SWA's approach is not so much what it is, but what it is not. And it makes a nice supplement to yesterday's post on lessons from the Tata Nano.

You Can't Snip Your Way to Being Whole

Competing airlines have cut routes, cut flights, cut staff, cut what they call frills (like being able to check bags for free), consolidated, and gotten testy with the customers. They have boosted revenues by charging for the old freebies (luggage, drinks, food, etc.). The only things Southwest's CEO Gary Kelly is actually cutting these days are undesirable flight times. It's growing services (in flight internet), markets (entering highly competitive airports (Minneapolis, Boston, LaGuardia), and carrier relationships (beyond North America). Layoffs and furloughs are off the table, as are charges for the not very frilly extras such as baggage and drinks.

This strategy is a "responsibly grow your way to profitability" strategy rather than "shrink away from financial failure" approach. Who knows whether or not this will succeed but given SWA's track record there's at least an even chance it can do it -and with the customer's good will at its back.

Friendly Skies

So that's the learning from industry to health care leaders today. And it's what many sound business people will tell you. Unless there is really low hanging fruit to lop off, and that has been gone out of most health care organizations for years, don't fool yourself by trying to shrink your way to profitability. Build a successful strategy for surviving (and thriving) and for winning the customer's (patient's) good will by designing environments and service offerings that are attractive (not opulent), practical (not sparse), and that solidly (not extravagantly) meet their needs (not their wildest dreams).

Like Tata, Southwest may be telling us something - like the well charted, friendly, skies (or roads) that we used to travel may still get us there. This may be the best airspace for health care leaders to seek as well - even during troubled financial times.