Frontline Fundraisers are Like Physicians

Imagine you are the CEO of your hospital.

The Fundraiser Blog • Steve Reed • March 19, 2024

When you think of frontline major gift fundraisers the same way as your CEO has to think about physicians, the analogy illustrates the essential pathway to dramatically increasing fundraising production. 

Imagine you are the CEO of your hospital. And you have an operating margin problem. (Both U.S. and Canadian hospital CEOs face cost pressures relative to revenue or funding levels.) 

Your first thought, as always, is cost reduction. 

Pay people less? Well, good luck with that in today’s labor market where the opposite is the norm. 

Fewer caregivers? Nope. You are already being pressured about your staffing ratios.  

Cut back on indirect expenses? Yes. You can find some overhead efficiencies. But rarely enough.  

Systems thinking …  

Ah ha, system capacity!  

What is your revenue constraint—the key leverage point in the system? 

There are lot of people involved in any healthcare operation … none of whom would be there if you didn’t have frontline caregivers.  

OK. Now, of your frontline people, who are those with whom the most revenue is directly associated? If you add more, who should generate more revenue in direct proportion to the number added?  

Ah ha, more Doctors is the answer! 

But … wait a minute.

Your CFO points out that physicians are in short supply, expensive to find and hire, and direct margins on investments in physician salaries are, well, “marginal.” 

Just adding people rarely works. It’s going to be more complex than that. 

OK. You’ve established physicians are your key leverage point. 

This is where Goldratt’s Theory of Constraints (1) comes in. To increase capacity in any system, identify the one key element that most limits capacity and invest in that one element in ways to elevate capacity. (Rinse and repeat, as necessary.)  

How do you get more capacity out of your medical staff? Maybe using RVU measures? (RVUs are a metric used to measure the work physicians do.) Yes, metrics are definitely good.  

But using metrics to just incentivize more volume has drawbacks.  

Like physician burnout and turnover … and those are just the most obvious of many.  

It’s always true, “people solutions,” like working harder or smarter, are inferior to system solutions. 

So here’s what you do. Study the workflow and (with their input) figure out how to have your physicians spend time only in ways that increases patient throughput, while keeping or improving clinical quality and patient satisfaction.  

Now you’re taking a lean lesson from how Toyota builds cars. 

You use a team-based approach that integrates allied providers (e.g., medical assistants, advanced practice nurses and physician assistants) with your physicians. You minimize physician involvement with committees or other duties. You invest in processes, people, and technology that allow physicians to focus on what only they can do, rather than adding to their workload the way the EHR does. (The EHR—Electronic Health Record—is the database that has turned physicians into data input clerks.)   

The result—beyond happier and healthier physicians—is significantly more throughput per physician and dramatic returns-on-investment from leveraging the focused framework you have built. In Canada that means more people receive care (and with less of a wait). In the U.S., that also means more revenue. 

By the way, here’s the scale of a hospital CEO’s “CPDR” (Cost Per Dollar Revenue) problem. U.S. hospitals began last year with a median negative operating margin of -00.9%. They ended 2023, according to the Kaufman Hall sector-wide median operating margin report, with a razor-thin 02.3% with escalating expenses remaining a concern. Canadian hospital CEOs face the same pressures and have to adhere to restrictions from the government and other sources of funding.  

Looks like a good reason to be grateful you’re not really a hospital CEO.  

But the statistics related to charitable giving are equally sobering.  

The percentage of households in the U.S. engaged in charitable giving has dropped from two-thirds 20 years ago to less than 50% today. A similar percentage drop in Canada has taken the number there to a 20-year low.  

In particular, annual appeals, direct mail of all kinds, and events are diminishing in real dollars and as a percentage of funds raised. Major gifts now account for more than half of all dollars raised. 

Generational differences and societal changes are part of the problem. 

But let’s not let ourselves off the hook by blaming the donor.  

A major factor is long-term deficiencies in fundraising practice.  

The data paints a bleak picture, even more so when you realize how little fundraising has changed in the last 20 years.  

A large part of the problem, as pointed out in my Spring 2023 article (2) in the Association for Healthcare Philanthropy Journal, is conventional wisdom. The traditional emphasis on transactional fundraising modalities depersonalizes giving, letting the chase for dollars dominate relationships with donors. 

When you think of “frontline major gift fundraiser” in place of “physician,” the analogy of frontline fundraisers to physicians illustrates the essential pathway to dramatically increasing fundraising production.  

Simple, huh?  

Well, honestly, no. That’s why the seven imperatives are the Seven Challenging Imperatives for Challenging Times.  

But there is solid evidence that many, if not most, healthcare fundraising shops could dramatically increase revenue, often doubling production or better.  

The first of the Challenging Imperatives is to focus on ROI—not CPDR—so you can create a high-performance core capability and leverage it by expanding frontline capacity. 

That’s the Why and the What. We’ll get into the How next time. 

Steve

1 Goldratt, Eliyahu M., (2004). The Goal: a process of ongoing improvement. Great Barrington, MA, North River Press 

2 AHP Journal, Spring 2023 

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Our Mantra

Given the resources and freedom to do so, most fundraising shops could dramatically increase revenue, typically at least doubling production. But to do so, organizations will need to change the way they raise money. Fundraisers need to adopt tools, changes in structure, well-defined processes, and supporting technology—with emphasis on personalized individual giving strategies—that create high-performance development organizations. And—most importantly—we need to be willing to challenge the ways we think about, talk about, lead, manage, and do fundraising.

About the author

Steve Reed offers 30 years’ experience fundraising, the last 20 of which include the application of Lean 6-Sigma principles for performance improvement in healthcare and healthcare fundraising. He is president of Engage Performance Advantage (USA) and a partner in Engage Performance Advantage Canada.

About Engage Performance Advantage

We are performance improvement change agents offering nonprofit organizations a way to radically redesign how they raise money, with more emphasis on personalized strategies and larger gifts. Our process-based critical path major gifts framework is paired with supporting technology to help leadership create a top-level fundraising organization. It’s a complete solution that can be rapidly deployed with dramatic gains.

Contact Us

To comment or pose a question: sareed@mpicompanies.com or 269.208.3577