Bred To Lead | With Dr. Jake Tayler Jacobs
EP: 036 The Healthcare Parallel: Why Optimizing the OR Alone Never Works
20 Jan 2026
Chapter 1: What is operational blindness in healthcare?
Let me describe a meeting that happens every week in hospitals across America. The CFO is looking at spreadsheets. Costs are up again. Instrument budgets are blown. Premium labor through the roof. Revenue leaking somewhere it can't be traced. The COO is fielding complaints from surgical services. Starting late, surgeons frustrated, OR efficiency stuck at a ceiling nobody can break through.
The CNO is watching quality metrics that won't improve. Near misses ticking up root cause analysis that keep pointing back to the same place of inflection. And when they turn to SPD directors and ask what exactly is happening, they get explanations like staffing challenges, volume spikes, supply chain issues, difficult surgeons. All of it is true. None of it's satisfying.
The meeting ends, action items are signed. Everyone agrees to try harder.
Chapter 2: How do internal metrics impact hospital operations?
Six months later, same meeting, same conversation, same frustration. Last episode, I told you about IBM and how Lou Gertzner discovered that the problem wasn't the people, it was the system. Today, I'm bringing that lesson home because what happened at IBM is happening in your hospitals all across America right now. This is bread to leave.
Since the age of 12, I've been about my father's business at the age of 30. He sent me to his vineyard.
I'm excited to be back. You're on the show again. I'm excited to welcome you back, Bridge Builders, to Bread to Lead. This is the business of developing amazing leaders of this generation and next to come. I'm your host, Dr. Jake Taylor Jacobs, and this is episode 36, season three. And this is the Read and Teach podcast. series from my newest book, Operational Blindness.
If you missed last episode, go back and listen. We laid the foundation, the IBM story, the Gershner insight, and why changing people doesn't work when the system is broken.
Chapter 3: Why is focusing on upstream systems crucial for OR efficiency?
And today we're building on that. We're taking the IBM lesson and mapping it directly onto healthcare. And in this episode, I'm going to give you this condition, give this condition a name and a name that once You hear it, you won't be able to unsee it or unhear it. Let's get into it. And before I go further, I need to address something. Some of you listening are in healthcare.
You're executives, operators, business leaders who found this podcast because you care about leadership, organizational transformation. operational excellence. And you might be wondering, why are we spending so much time talking about thorough processing departments? What does instrument reprocessing have to do with me? Here's why this matters to you.
Every organization has its own version of SPD. Every organization has that upstream function, that support department, that back office operations, that leadership treats as overhead, a call center, a necessary evil, something to be managed, not optimized. And in every In almost every organization, that overlooked function is quietly constraining the performance of everything downstream.
In healthcare, surgical services is the revenue engine. It's where the money is made, and SPD is the upstream constraint that determines whether that engine runs smoothly or sputters. You can optimize the ORR you want, better scheduling, faster turnovers, happier surgeons, but if the instruments aren't ready, none of it matters.
So when I talk about SPD, I'm really talking about the constraint management.
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Chapter 4: What role does sterile processing play in surgical performance?
I'm talking about upstream, downstream dynamics. I'm talking about how organizations become blind to the functions that actually determine their performance. And if you're in manufacturing, your SPD might be supply chain or your maintenance department. If you're in tech, It might be infrastructure team or your QA process.
If you're in professional services, it might be your back office operations or your knowledge management system. The principle is universal. The functions you overlook become the ceilings that you can't break through. And we focus on SPD because that's our expertise. That's where we've spent 20 years. But the pattern we're going to discuss, they apply everywhere. All right.
Now, let me bring this home. to health care specifically. Here's what I've learned after more than a decade in operational turnaround and more than 20 years of our business since health care solutions being in health care operations turnaround, specifically supporting sterile processing and peri-op departments. The patterns are the same.
Hospital to hospital, system to system, region to region, the names change, the organization charts change, the specific complaints change, but the fundamental dynamic is identical. A leadership knows something is wrong with SPD. They can feel it. They see the symptoms everywhere. Cost overruns, OR frustrations, quality concerns. But when they try to get answers, they typically hit a wall.
The SPD director has data that looks fine. The metrics are acceptable. The trades are getting processed and the fires are actually getting put out. So why does everything still feel broken? And this is the question I obsessed over for years.
I've kept seeing talented SPD directors, smart, experienced, hardworking people who genuinely believe that they were doing well while the organization around them was drowning. They weren't lying. They weren't lazy.
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Chapter 5: How can hospital leaders identify operational blindness?
They were incompetent. They weren't incompetent. They just couldn't see what everyone else was seeing. And that's when I realized this isn't an execution problem. This isn't a training problem. This is a people's problem. This is a visibility problem. And that visibility problem, it has a name. And I'm gonna read to you a section in a book.
In case you're following right now, I'm actually taking an excerpt, I'm taking time throughout every single episode to actually read an excerpt out of the book. And the beautiful thing about our book, Operational Blindness, is that when you go to the table of contents, you actually have each one of the segments actually itemized out.
And this is very important because a lot of people just put chapters and you put the title of the chapter and then the page of the chapter. And then when you're going back to try to get references of that chapter, you're trying to remember which chapters. subset in the chapter. What page and where was it?
And so we've already pulled out each one of these little segments and we've created the table of contents to follow the segments. So if you fall in love with a segment, you can just notate in your table of contents. So you don't have to always keep referring back and looking at colors as you speed pass each page, trying to figure out where you last held your notes.
So today we'll be reading out of page 24 through page 26 of our newest book, Operational Blindness, and it will be available here pretty soon.
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Chapter 6: What are the consequences of ignoring upstream constraints?
If you don't have access to it, you can get it. If you listen to this as a playback and the book is already out, you know exactly where to go. You can go to Amazon and actually go ahead and get this book. And if you are an executive, we're actually gifting this book to you.
You just have to stay to the end of the episode to figure out exactly how you can get a free copy of this book yourself as our thank you to you. All right. So I've spent over a decade. I'm on page 24, the health care parallel going into page 25. I've spent over a decade in operations turnaround and over 20 years with our company.
We've spent in health care operations and I've watched the same patterns. Gertzner observed an IBM play out and I watched the same pattern Gertzner observed at IBM play out in hospital after hospital. Ask any hospital executive about sterile processing. And you'll hear variations of the same refrain. It's a cost center. It's always reactive.
It's a necessary headache that we manage as best as we can. The expectations are low, and even those low expectations often go unmet. The explicit assumption behind all of this is clear. SBDs can't transform. They're not strategic assets. They're overhead. You contain the cost, manage the crisis, and hope for the best. That's simply the nature of sterile processing. Elephants can't dance.
But here's what I've learned in over a decade of turnaround and with over 20 years that Sips Healthcare has spent in the space working in and around these departments, the limitation isn't real. It's a belief. It's just like IBM. That belief is invisible to people trapped inside it. The sterile processing director who tells you everything is under control isn't lying. They genuinely believe it.
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Chapter 7: How does the Sterile by Design operating system work?
The metrics they track, turnaround times, volume process, productivity ratios, all look acceptable. The fires get put out, the trades get processed, and the ORs keep running more or less. They can't see what you see. They can't see the surgeon's frustration. They can't see the case delays that cascade through the OR schedule. They can't see the cost overruns that show up on the CFO spreadsheet.
They can't see the quality risk that keep the CNO awake at night. They're not hiding the truth from you. They're hidden from the truth themselves. And this is what I call operational blindness. And it's the hidden force destroying healthcare operations from the inside out. That was from our book, a segment from our book, Operational Blindness, page 24, 25.
And I want you to think about how your organization talks about SPD, not in official documents, in real conversations, in the hallway, in the leadership meeting, when the SPD director isn't there. What do you have? It's a call center. It's always reactive. It's a necessary headache. We just have to manage it. The language reveals everything.
When you call something a necessary headache, you've already decided it can't be excellent. You already lowered your expectations. You've already accepted dysfunction as the baseline. And here's the thing. That acceptance becomes self-fulfilling prophecy. If you believe SPD will always be reactive, you don't invest in making it proactive.
If you believe it's just a cost center, you don't treat it like a strategic asset. If you believe it's a headache to be managed, you don't give it the attention that will make it stop being a headache. The belief creates the reality it predicts. While SPD is the starting point for perioperative turnaround, Now, let me explain something that took years to fully understand.
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Chapter 8: What steps can leaders take to cure operational blindness?
When health systems want to improve perioperative performance, where do they usually start? The OR, makes sense, right? That's where the action is. That's where the revenue is generated. That's where the surgeons are. So they invest in OR scheduling software. They bring in consultants, optimize turnover times.
They implement lean processes for room setup and they get some gains, maybe five, 10% of improvement, but then they hit a wall. The wall that everyone hits every single time, a ceiling that can't break through no matter what they try. You want to know why? It's because the OR is the downstream. You cannot optimize downstream performance when the upstream constraints is unaddressed.
Think about it like a river. The OR is where the river flows into the ocean. That's where you see results. But SPD is upstream. It's where the water comes from. If there's a dam upstream and if there's a constraint blocking the flow, it doesn't matter how wide you make the river bed downstream. The water isn't going to come. And SPD is that constraint.
When instruments aren't ready, cases start late. When trays are incomplete, surgeons wait. When quality issues slip through, patient safety is compromised. When the OR can't trust SPD, they build workarounds that consume resources and create friction. All of those problems originate upstream. And all of those problems limit what's possible downstream. This is why we always start.
with SPD when we do perioperative turnarounds, not because SPD is the most glamorous function, not because it's where the money is most visible, but because it's the constraint. And the theory of constraints tells us improving anything other than the constraint doesn't improve the system's performance. It just looks better.
You can optimize the OR to perfection, but if SPD can't reliably deliver instruments, the OR will never perform at its potential. Fix SPD first, then harvest the downstream gains. Now, here's what gets interesting. The SPD directors sitting in the leadership meeting, they're not hearing what you're hearing. They're not seeing what you're seeing. Their metrics look fine.
Turnaround times are acceptable. Volume is being processed. Productivity ratios are in range from where they sit. The operation is working. But you're experiencing something different. The CFO sees cost climbing in ways that don't make sense. The COOC's OR efficiency stuck at a ceiling. The CNOC's quality risk that won't go away. The surgeons are complaining again.
The OR director is frustrated still. Same organization, completely different realities. How is this possible? The answer is they can't see what you see. The SPD director isn't lying to you. They're not hiding problems. They're not being defensive just to protect their job. They genuinely don't know.
The metrics they have access to, turnaround times, volume, productivity, those metrics measure activity. They measure what happens inside SPD. But the symptoms you're experiencing as an executive, cost overruns, OR delays, quality risks, those are outcomes. They happen outside the SPD downstream in the OR and the CFO's spreadsheets and the CNO's incident reports.
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