Winning a Losing Game, Part V: Competing Against the G.O.A.T.
Until 1992, the word “goat” was used in sports to describe someone who made a crucial mistake to cost their team a game, with Bill Buckner’s misplay of Mookie Wilson’s “little roller up along first” in Game 6 of the 1986 World Series forever etched in the minds of Red Sox fans.
In 1992, Muhammad Ali’s wife incorporated “G.O.A.T., Inc.”, a logical step for the man who referred to himself as the “greatest of all time.” As Ali also liked to say, “it’s not bragging if you can back it up.” With that, a term of derision turned into one of acclaim: The Greatest Of All Time.
2021 has already been quite the year for GOATs, with Nick Saban winning his seventh national championship, Tom Brady winning his seventh Super Bowl, and Novak Djokovic winning his ninth Australian Open title. Whether or not you revere Muhammad Ali or Nick Saban or Tom Brady or Novak Djokovic, it is difficult not to acknowledge their excellence.
2021 has also confirmed another GOAT: HCA.
HCA competes like Muhammad Ali, by being stronger and faster than the competition; like Alabama, by executing their game plan to near perfection; like Tom Brady, by countering the myriad schemes designed to stop him; like Novak Djokovic, by outlasting the competition.
HCA has four “championship games” per year, i.e., quarterly earnings reports. HCA reported its 2020 results on February 2 and filed its annual report with the Securities and Exchange Commission on February 19. This statement from the earnings press release sums it up best:
“Same facility admissions and same facility equivalent admissions declined 3.4 percent and 7.5 percent, respectively, in the fourth quarter of 2020 compared to the prior year period. Same facility emergency room visits declined 21.0 percent in the fourth quarter of 2020, compared to the prior year period. Same facility inpatient surgeries declined 6.7 percent, and same facility outpatient surgeries declined 5.1 percent in the fourth quarter of 2020, compared to the same period of 2019. Same facility revenue per equivalent admission increased 14.1 percent in the fourth quarter of 2020, compared to the fourth quarter of 2019, due to increases in acuity of patients treated and favorable payer mix in the current quarter.”
In the midst of a global pandemic, HCA had its best year ever as measured by revenue, gross profit, operating income, pre-tax income and EBITDA despite erosion in virtually every operating metric. HCA’s performance was simply amazing – the greatest of all time in the history of the hospital business.
There are two key differences between HCA and the other GOATs.
First, the GOAT almost always gets their opponent’s best game. Every opponent facing Ali or Coach Saban’s Crimson Tide or Brady’s Patriots or Djokovic has that game or match “circled on the calendar” for days or weeks or months in advance, with players and coaches alike focused on playing their best game against the GOAT. Those opponents know that, in the words of Ric Flair, professional wrestling’s GOAT: “To be the man, you gotta beat the man.” HCA competes like these GOATs, but few of their opponents play their best game consistently against HCA. And the compounding effect of dozens of health systems failing to compete effectively against HCA every day is that HCA is the GOAT.
Second, Ali, Saban, Brady and Djokovic play for titles and rings and trophies and endorsement deals, the “spoils of victory.” In contrast, HCA is playing a negative-sum game, the proof of which is the ever-so-slight sequential year-over-year decline in inpatient revenue payer mix.
HCA has been executing their plan to compete in the negative-sum game that is the hospital business for decades. Has your health system been executing your plan for a negative-sum game for decades? Does your system even have a plan for a negative-sum game against HCA and Optum and Walmart and Amazon? If not, then consider another Ali quote: “Don’t count the days. Make the days count.”