Slack resources—resources over the amount required to do an organization's day-to-day work—have an undeserved bad reputation. Many hospital executives have worked hard to remove slack resources, perceiving them as evidence of organizational inefficiency. But it isn't the presence of slack that is a problem; rather, it's poor management of slack. In fact, some hospitals known for their clinical quality and patient safety have organizational slack and still are profitable. The right amount of slack makes organizations successful.

Creating Stronger Hospitals Through Innovation

Are slack resources the same as having people with too much time on their hands? Quite the contrary. Slack resources are essential for driving the organization to meet greater demands and goals.

Innovation is essential in dynamic markets. Research and development, common among product businesses, is a nonrevenue-producing activity that enhances market position by developing new products to meet evolving customer expectations. Similarly, leading service industries rely on innovation to lower costs and improve the customer experience. Investment in nonrevenue-generating activities like R&D and staff training are strategically important expenses.

Many hospitals seem reluctant to adopt the innovative-service business model. Community hospitals view their mission as providing care without the added mission of promoting research and innovation. Consequently, few community hospitals maintain R&D resources. Similarly, many hospital executives look at leadership development and staff education as expenses to be minimized. But hospitals operate in a dynamic industry in which they must adapt to regulatory and technological changes as well as emerging health and social issues. Hospitals are expected to address patient care problems and measurably improve in an increasingly transparent environment. They need to be innovative.

And to be innovative, organizations need to provide resources so people can experiment and find solutions to important problems. While we all know of instances in which people champion a solution on their own time, it's unrealistic for organizations to expect employees to solve problems outside normal work hours. If an organization has done a good job of achieving lean staffing, people don't have time to do research on the job without ignoring other responsibilities or cutting corners. Inadequate planning is often the result of distraction because people are thinking about the day-to-day work that is piling up. Research shows that staff members have a hard enough time addressing brush fires and don't have time to address systemic errors.

Using Slack Resources to Support Innovation

Health care is as complex as any industry with its mixture of scientific knowledge, technical skills and team coordination. Solving problems in complex environments requires analysis, innovation, testing and integrating many professionals into the process. It requires time away from daily tasks and putting out brush fires. It means doing unproductive work. Leadership and staff training are critical to achieving strategic and operational success. Assuring the adoption of new practices requires leaders at all levels of the organization to be aligned in their vision, share common messages and have an integrated system for monitoring performance. This can't be done in a memo or a single meeting. Management systems need to be developed, events need to reinforce vision, messages need to be conveyed, and priorities need to be outlined.

If there are no slack resources for staff members, training won't occur or, if it does, routine activities will be understaffed temporarily. Unlike a manufacturing center, hospitals cannot shut down services for training. Most hospitals have learned from others that you need to provide additional (slack) resources for staff training for a new computer system, but fewer hospitals allocate resources to provide training for clinical care.

Finding the Right Balance

So how do you marry the need for slack with the need to manage expenses?

Enable interested people to work on expense management. Provide them with such resources as time away from routine responsibilities, and access to information, materials and training.

Develop a capability for research, project work and staff training. Productivity systems (which rely on counting workload units) usually consider activities that don't produce workload units as unproductive time. But viewing research as unproductive sends the wrong message. Consider it R&D.

Create a budget for R&D activities (time and dollars). Manage R&D expenses as you would any other expense, but assess productivity by how well projects are run and whether projects return value for the effort. For example, if you spend $100,000 for labor and supplies on a project, did you see the expected improvement in patient satisfaction? Did error rates drop the expected amount when a new procedure was designed and implemented?

Leadership and management are needed to make the investment in slack productive. Hospitals must provide resources to encourage experimentation and to ensure that change is successful. Cutting slack resources to improve today's financial performance comes at the expense of tomorrow's performance. Responsible managers secure the future by providing slack resources for innovation and change, manage and monitor their use, and measure the effectiveness of their application. As with a good suit, if you cut too much slack, the result will be a poor fit.

Cary Gutbezahl, M.D., is the president and chief operating officer of Compass Clinical Consulting in Cincinnati.

The opinions expressed by authors do not necessarily reflect the policy of Health Forum Inc. or the American Hospital Association.