Healthcare is an industry with a calling. In how many other economic sectors is much of the work covered by professional oaths of ethics and duty? But healthcare is also a business, and organizations that want to succeed in their mission need to survive in the market.
That raises the question of what organizations need to do in order to survive and fulfill their mission. Unfortunately, finding the answer must balance theory and practice. In 2013, Harvard Business School professor Michael Porter and Thomas Lee, a medical doctor and chief medical officer, wrote “The Strategy That Will Fix Healthcare” in the Harvard Business Review.
Their suggestion was to transform the value proposition that care organizations offered patients. The authors suggested organizing integrated practice units that would treat diseases and related conditions, measuring outcomes and costs for every patient, moving to bundled payments for full care cycles (rather than attempts at controlling payments through straight capitation), integrate separate care delivery systems (including concentrating volume in fewer locations and a more strategically chosen scope of services), expanding geographic reach to increase value and not necessarily volume for its own sake, and creating an enabling IT platform.
But Becker’s Hospital Review suggests that “few of the theorists have the next great answer.” Instead, authors Scott Becker and Tamara Rosin argue, what is more likely to help is a business-focused approach that is more closely tied to market realities. As they write:
More often, if someone can understand who their customer is, where their revenues come from and start by really managing and developing those pieces of information — building upon the core of what works and building a dominant system — they are more likely to succeed. For example, there is no question that inpatient volumes will continue to decline. There is no one great answer to this other than to keep costs in the system rational and to keep becoming dominant in those things where the system is making money and continually grow revenues in those areas.
They make a variety of points:
- Organizations need to think like former GE CEO Jack Welch and focus on market dominance, which brings a world of financial and branding advantages.
- Cash cows are important for sustainability, but you have to keep testing new areas.
- If you don’t own your practices, you’re sending potential profit to someone else.
- You have to meet consumer expectations in areas like transparency, convenient hours, and ease of access to electronic systems.
Most importantly, there is no simple, silver-bullet strategy for success. Creating a strategy for a given organization will mean learning from the experience of others, but also balancing multiple factors in a way that work for the markets you serve.
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