The Funding Asymmetry

Should Every Initiative Compete Equally?

The Hidden Bias in Healthcare Investment Decisions

Imagine three proposals arrive before your executive team.

A mature service line seeks capital to improve margin.

A new specialty clinic needs funding to establish demand.

An AI pilot requests a limited investment to test whether it can improve clinical or operational performance.

The finance team applies the same hurdle rate, payback period, and return expectations to all three.

It looks fair. But is it strategically sound?

Equal treatment can produce unequal strategic outcomes.

When every initiative must prove its value using identical criteria, established businesses often have an advantage: their revenue, costs, and returns are already visible. Emerging opportunities have less history. Experiments may generate their greatest value through learning rather than immediate revenue.

A funding process designed to reward certainty can quietly disadvantage the very opportunities an organization needs to explore its future.

One Portfolio. Different Purposes.

Not every investment exists to deliver the same kind of value.

• Mature businesses: Evaluate return on investment, contribution margin, cash generation, and operational performance.

• Emerging opportunities: Assess evidence of demand, strategic fit, scalability, and the option value of entering a promising market.

• Strategic experiments: Examine learning velocity, the quality of evidence generated, the cost of testing assumptions, and whether results justify the next stage.

These measures should not excuse weak economics. They should reflect what each investment is intended to accomplish—and what evidence is reasonable to expect at its current stage.

In The Innovator’s Dilemma (1997), Clayton M. Christensen examined how established companies can struggle to pursue disruptive opportunities when existing business priorities and resource-allocation practices favor established markets and customers. The implication for healthcare leaders is uncomfortable: a process optimized to protect today's performance may limit tomorrow's options.

The Provocation: Are We Mistaking Consistency for Fairness?

Consider the questions your board should be willing to confront:

• Are we using mature-business return expectations to judge emerging opportunities?

• Does every initiative face the same hurdle rate and payback horizon—even when uncertainty and strategic purpose differ?

• How should we fund experiments when the primary return is learning, not immediate revenue?

• Are we giving initiatives too much protection simply because we label them “strategic”?

• What criteria should change as an initiative matures?

The last two questions matter just as much as the first three. Differentiated funding can correct a structural bias, but it can also become a loophole. Calling a project innovative must not exempt it from evidence, milestones, or consequences.

Rita Gunther McGrath and Ian C. MacMillan’s Discovery-Driven Planning (Harvard Business Review, July–August 1995) offers a useful discipline for uncertain opportunities: make assumptions explicit and test them as evidence emerges, rather than treating uncertain forecasts as established facts.

The lesson is not to lower the bar. It is to define the right bar for the decision being made.

Introduce Funding Asymmetry™

Funding Asymmetry™ is the deliberate use of differentiated funding rules, evidence thresholds, time horizons, and performance measures according to an initiative’s maturity, uncertainty, and strategic purpose.

That means setting the rules before the funding decision—not rewriting them after a favored project disappoints.

A practical approach is to establish distinct investment pathways, each with:

• A clearly stated strategic purpose.

• Appropriate performance measures and time horizons.

• Defined funding stages and evidence milestones.

• Explicit conditions to scale, redesign, pause, or stop.

• A review process that changes as uncertainty decreases.

An experiment may earn its next funding tranche by disproving a costly assumption.

An emerging specialty may need evidence of demand before expansion.

A mature service line may be expected to demonstrate measurable margin improvement.

Each remains accountable.

The evidence simply differs.

The Boardroom Test: What Are We Actually Rewarding?

If every proposal must demonstrate near-term financial certainty, your organization may be rewarding predictability—not necessarily strategic value.

But if strategic ambition is allowed to override financial discipline, you may be funding hope instead of opportunity.

The executive challenge is to balance both: protect proven performance, develop credible new opportunities, and learn inexpensively before making larger commitments.

Phoenix MedStrategy™ helps healthcare leaders examine whether investment criteria, decision rights, and performance measures reflect the organization's real strategic priorities—so capital and leadership attention are allocated intentionally, not simply according to what is easiest to justify.

The question for your next board meeting:

Should a proven business, an emerging opportunity, and a strategic experiment face the same funding rules—or the same standard of accountability?

Those are not the same thing.