Across the country, in every industry, companies are facing uncertain economic times. Signals are mixed. Market behavior is erratic. Economists debate whether we’re headed for a recession—or whether we’re already there—and how it will play out. At Point B, we’re focused on cutting through the noise and helping our clients make sure they’re best positioned for whatever lies ahead. To put this moment in perspective across two of the bellwether industries we serve, we spoke with two of Point B’s senior executives: Sicely Donaldson, Executive VP/ Health & Life Sciences; and Mark Warren, Interim Executive Vice President, Financial Services.
Participants
- Sicely Donaldson - Executive Vice President, Health & Life Sciences
- Mark Warren - Interim Executive Vice President, Financial Services
How is the economy impacting the industries we serve?
Sicely Donaldson, Health & Life Sciences
We’re seeing a recessionary trend, with a different level of impact from past recessions. Multiple waves of Covid have already taken a devastating toll on our health system—from an inability to fill beds and meet patient needs for procedures and surgeries, to lack of capacity to meet wellness needs, all while workforce shortages and burnout grow to an all-time high.
Clinical workforce burnout remains a significant challenge today. We've never seen anything like this before in the industry. It’s causing folks to leave the profession altogether or retire early, which has created a profound impact on the industry and the cost to attract and retain clinicians.
From a health plan perspective, the near-term effects are less notable. Since health plans are in the business of managing medical costs, their focus has been on staying lean in anticipation of medical costs increasing, while taking the opportunity to position for growth- whether that be business diversification, transforming to become more consumer centric, or re-imagining how work gets done with AI/automation.
As for life sciences organizations, we’ve seen continued growth in Pharma and targeted investment in early-stage biotech and cell and gene therapies companies, but inflation and market conditions have resulted in some pull back in investment that is causing organizations to take a step back and think about where they place their bets, focusing on efficiency through AI/automation and digital transformation.
Mark Warren, Financial Services
Many financial institutions are moving into a slightly defensive mode. For some institutions, rising interest rates mean they can earn more on their loans. But, at the same time, there’s a slowdown in mortgages and other types of lending growth. As a result, banks are being cautious and making sure they have extra operating capital on hand.
On the insurance side, companies are looking for ways to reduce operating costs quickly, especially P&C companies. Automobile insurers are already dealing with supply chain issues and inventory shortages. And claims costs are rising because inflation is impacting the cost of materials, resulting in higher payouts and slimmer profits. In addition to adjusting their pricing strategies many are looking to cut costs.
What were the early indicators that we're dealing with a downturn, if not a recession?
Sicely Donaldson, Health & Life Sciences
Health and life science organizations are seeing a continued degradation of financials without a quick way to recover. It's both a long and short game. They need to survive through the downturn while leveraging the opportunity to reflect and reinvent where needed to achieve growth on the other side of these economic conditions. It’s not a simple or straightforward prospect, and it’s putting new levels of pressure on the industry.
Mark Warren, Financial Services
Softening in mortgage volume and auto loans. Although overall loan growth was hot in Q2, most expect a slowing in in the second half of the year. As a result, many organizations are reducing spending, if not looking to cut costs. And long-term transformation efforts are being chosen cautiously and evaluated with added scrutiny.
It’s never been more important to consider your data strategy, ensure you can use all the information available and react quickly.
Sicely Donaldson
Executive Vice President, Health & Life Sciences
How can companies address current conditions while preparing for what’s next?
Sicely Donaldson, Health & Life Sciences
This is a perfect opportunity to think forward about how you organize and get work done in the future. One of the areas we're leaning into is how to leverage automation and reorganize with reduced staff. Start by identifying your most critical work and get creative about all the ways it could be done differently.
The other area to focus on is sustainable cost reduction. This includes getting lean through outsourcing, divesting and automating, while considering where smart investments are needed to help your organization thrive when the market recovers.
Consider how and where you should prioritize your efforts. What is your growth strategy, and what will it take to achieve it? Unfortunately, there will be winners and losers during and after these tough times. Organizations that can pivot and develop the right strategies will be better positioned to win.
Mark Warren, Financial Services
We’re helping financial services companies understand what they need to slow down on, what they need to stop, and where they should double down on efforts and investments.
The questions we want to answer are: How can you maintain progress toward your overall strategy, avoid putting yourself at a disadvantage with competitors and prioritize your efforts based on their long-term value? In many cases, planning processes aren’t as iterative as they should be. That makes it more difficult to react quickly when needed.
Companies are challenged to cut costs without gutting their strategy. The quickest place to cut back is in your people, but the speed of change has increased, and the recovery may come sooner than we think. So how can you cut without losing the talent you’ll need when things pick back up? How can you take short-term actions without suffering long-term consequences?
We look to drive out process inefficiencies with automation, AI and machine learning. We also help organizations build adaptive strategies that allow them to scale up or cut back more quickly in response to change.
In this market, it’s a good time to get help with contract assessments and contact center efficiencies. We do a general health check on strategic programs to identify quick wins around people, process, technology and data. These are fast, low-effort projects that yield high-impact results.
We also build tactical roadmaps to ensure a strong direction for the next 6 to 12 months. As we move into next year, this helps organizations maximize their investment in the areas where they’ve decided to double down. It’s a small-dollar insurance policy to make sure your large-dollar investment gets maximum value, moves you closer to your vision, and outpaces your competition.
We’re helping financial services companies understand what they need to slow down on, what they need to stop, & where they should double down on efforts and investments.
Mark Warren
How should leaders decide where to cut and where to invest?
Sicely Donaldson, Health & Life Sciences
It depends on the organization and their breakdown of fixed and variable costs. You also need to think about your current asset base and services, your growth strategy and what you want to be known for in the future, and how that aligns with cost and revenue shifts you should be making now.
In times like these, it’s important to know what to double down on and where to make quick decisions that support your core business efficiently. The key is balancing really tough trade-off decisions that keep your bottom line in order while still positioning your organization for growth—whether that means doubling down on your ambulatory growth strategy, partnering with a retail pharmacy, innovating around clinical trials, or reimagining how to grow clinical capacity to meet access needs. We’re helping organizations think through these complex decisions, which are common across the industry but also unique to each company.
Mark Warren, Financial Services
When it comes down to it, you’re trying to identify and balance risk. Part of your competition will be investing. If you aren’t investing too, you can be left behind. If your competition isn’t investing, you have the opportunity to do so in ways that increase the distance between your organization and theirs. If an initiative is directly aligned to achieving your vision, we help you think about how to make it happen, whether that means bringing products to market faster or cutting back to reduce costs and risk.
What final advice would you share with leaders as they navigate the changing economy?
Sicely Donaldson, Health & Life Sciences
First, get laser-focused on what's most critical to your customers. At the same time, it’s also critical to focus on engaging and retaining your top talent. The industry is becoming more and more consumer-focused, and you can apply that ethos to your workforce strategy. It's easy to get focused on what you need to do to survive and lose sight of how that affects your employees—and, in turn, how your employees represent themselves with your customers. In healthcare, the way your workforce meets the consumer can have a direct impact on a person’s health. The second thing I’d say is: Let go of the fear around thinking big and making big changes. Times like these require focused and bold moves.
Mark Warren, Financial Services
Overall, avoid inaction. Do something with the new information and conditions you’re seeing. I’d say this holds true across all of the industries we’re talking about today. Inaction increases your likelihood of a negative long-term result.
