Your Primer to Healthcare Mergers and Acquisitions

4 Dangers of Not Knowing What Things Cost

Mar 11, 2014

by Tom Schramski

By Tom Schramski, PhD

Volume 1 Issue 2, February 17, 2014

In the increasingly digital world of finance we often guess and err about the true cost of a personal expense. Sometimes the mistake has limited consequences (what it really cost to go to the movies with the kids), while other times the damage can be significant (the true expense of our oldest daughter’s college education). For business people, healthcare and otherwise, knowing what things cost is essential. If you are accurate you can adjust other variables including cash flow. If not, you can lose your business.

The recent Kaiser Health News article, “How Much Does A New Hip Cost? Even The Surgeon Doesn’t Know,” makes the point forcefully in a marketplace full of disruption. In a large study only 20% of surgeons were close, with guesses ranging from 1.8% of the actual price to 24.6 times than the actual price. Imagine this: “Honey, I’m not sure if I need $1 to fill up the car or $1,250. How much room do we have on the Visa card?”

No successful business operates that way and it’s why many businesses need to address the dangers of not knowing what things cost. Why?

  1. If you don’t know you will not have the data necessary for making very basic decisions affecting your future. How many people do you hear say something like “we have no way of really knowing” or “we’re getting as close as we can.”
  2. If you don’t know you can’t provide the necessary information to help the rest of your workforce build budgets and evaluate their performance.
  3. If you don’t know you strangle the internal force of innovation because you are too hesitant about the past and present to make a commitment to the future.
  4. If you don’t know you will go out of business and/or you will be gobbled up by others who figure out the true cost.

The healthcare marketplace is more challenging than most because of the competing interests of public funders, insurance companies, and the common good. And this is why the opportunity is huge. If you are relentless about discovering the true cost of your product or services, you will have a significant advantage and the confidence to act on it. The truth will set you free.

Tom Schramski

Tom Schramski PhD, CM&AA


Tom was the Founder and Managing Partner of VERTESS. He was a Certified Merger & Acquisition Advisor (CM&AA), consultant, and Licensed Psychologist with over 35 years of very successful national experience in the healthcare marketplace, including co-founding and building a $25 million behavioral health/disabilities services company. Tom represented sellers and investors across the healthcare spectrum and was recognized for his executive leadership in the 2005 Entrepreneur of the Year issue of Inc. Tom passed away in December 2018.

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