Insights for making your decision to quit or grit.
If you haven’t heard, Walmart Health quit because their business model was not sustainable. The decision to quit was simply a business decision.
If you’re not familiar with healthcare finance, let me just say that provider service organizations are tough businesses. The majority of the revenue is paid to the healthcare professionals delivering the services. The cost of supplies is not a big cost driver which is why I was curious as to whether a retailer with supply chain expertise like Walmart could unlock profits.
Consolidation of service providers increases market power and often enables companies to negotiate higher rates from commercial payers. With that said, higher rates from one payer class is not typically enough to make the business sustainable, especially for publicly traded companies.
Publicly traded companies have higher operational costs than an independent physician office because there are more reporting requirements and consequently, more investment in system, processes and people.
Healthcare is a tough business to transform
Everyone needs/wants healthcare but few can afford to pay for it. Bending the cost curve to make healthcare more affordable requires a fundamental transformation in how we live and receive care.
Startups have and will continue to take on the challenge of bending the curve. Unfortunately, many of them will fail. It’s not because the leaders are not smart enough, tough enough or gritty enough.
The industry is fragmented, risk adverse due to the nature of the service and in my opinion, underfunded to meet the current demand. Walmart Health is a case in point. That’s why change often requires support from stakeholders beyond the industry and government funding.
Making the decision to quit
The decision to quit was likely easier for Walmart executives than startup founders because they looked at the business objectively and concluded that the model was not sustainable.
According to my Linked In survey last year, the majority working in healthcare are driven by their passion to make an impact. Passion can be blinding which makes the decision to quit or grit emotional especially for startup founders.
Emotional Agility
Emotional Agility is the best book that I’ve read to date on when to grit or quit. If you don’t have time to read the whole book, read Chapter 9, Emotional agility at work. It provides a simple way to think about your situation so that you don’t mistake stupidity for gritty.
A few tips from the book for moving on with grace:
1/ Acknowledge your sunk cost
A sunk cost is a cost that has already been incurred that cannot be recovered. All of the money, time and energy invested to date in a strategic initiative or startup is sunk. Don’t let sunk cost hinder your decision.
2/ Value your opportunity cost
An opportunity cost is the value of an alternative path forgone. There are few entrepreneurs/leaders like Elon Musk who seem to do it all. If you’re keeping up with your personal tax returns, the IRS may already be providing some insights for you to consider. Don’t ignore it.
3/ Answer these questions about alignment
i/ Does your current path bring you joy and satisfaction?
Your answer may be colored by the stage of your startup. The title startup founder or founding team often gets glorified similar to professional athlete, model or movie star. However, the glory feeling doesn’t last long. The path is very long, hard and lonely path especially if you’re bootstrapping. It can take a toll on your mental health especially if you don’t have strong self-care practices.
ii/ Does your current path align with your values?
If you haven’t defined your values yet, that’s something that you should do sooner rather than later. Understanding what you value makes difficult decisions easier. If you tend to overthink things, it will also give you peace of mind that whatever your decision, it is the right one.
iii/ Does your current path utilize your strengths?
Take a break and a good look at your results. Are you meeting your quarterly goals and milestones. If not, why not. Is the problem your goals or a misalignment with your strengths.
