Take a Moonshot and Make a Giant Leap for Healthcare

This past July, The Health Management Academy gathered many leaders from within and outside of our industry for a summit that probed “CEO Leadership in an Age of Disruption.” There were many heavy-hitters in attendance, but in particular, I thought the discussion of Google’s Eric “Astro” Teller was particularly interesting.

Teller’s official title at Google X, the company’s research and development lab, is “Captain of Moonshots.” And if that’s not a disruptive title, I’m not sure what is. (It should be noted that renowned author Thomas Friedman discussed Teller in his opening remarks entitled “Thriving in an Age of Accelerations.” Teller himself was not present.)

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Elements of Successful Outsourcing

Has it ever occurred to you to equate outsourcing with Maslow’s hierarchy of needs? It had not occurred to me either until I read an excellent post by Kate Vitasek, architect of the “Vested Business Model” who is also a professor at the University of Tennessee.

Abraham Maslow, the founder of humanistic psychology, defined the hierarchy of needs something like this: human beings are motivated by unsatisfied needs and certain lower needs must be satisfied before higher needs can be addressed. The hierarchy of needs pyramid starts with physiological needs at the base, then moves up to safety needs, social needs and esteem needs. The fulfillment of those needs is what leads to self-actualization.

Is your outsourcing relationship self-actualized?

In a nutshell, here is Vitasek’s comparison to outsourcing.

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How to Move from a Holding Company to an Operating Company

It’s the key for health systems to achieve economies of scale

Recently, I had the distinct pleasure of participating in a panel at Becker’s Hospital Review 8th Annual Meeting with Khosrow Shotorbani, president and CEO of TriCore Reference Laboratories, Bill Santulli, EVP and COO of Advocate Health Care and Mark Dixon, president of The Mark Dixon Group and former regional president of Fairview Health Service. We spoke about the nationwide trend of health systems moving from a holding company model to an operating company model and all agreed that this trend will continue to accelerate.

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Focus on Healthcare Finances Will Only Get Greater

Margin pressures are not new to healthcare organizations. As hospitals and health systems wait in limbo as the healthcare reform debate continues, they will only increase. A recent Becker’s Hospital Review article highlights the need for health systems to continue to find ways to re-structure in order to find added value and remain viable: Activity-based costing, team commitment, understanding the drivers of work and embedding cost savings into operations.

It also lists 10 areas that the author recommends health systems target for maximum cost improvement: Manage the healthcare cost of your own workforce, eliminate subscale services, optimize service line spend, maximize IT spend, flex the workforce, find the waste, reconsider capital spend, reduce the cost of leakage, reduce bad debt and avoid potential costs.

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Everyone Wins with the Right Strategic Relationship

There are organizations—healthcare ones among them—that are oriented towards insourcing functions, even when those functions lie outside of the organization’s core competency. There was a time (and still may be times) when full insourcing of the supply chain made sense: think Ford Motor Company in its early days. However, it is becoming more difficult to make a case for insourcing non–core functions, especially in healthcare, when better efficiency, more flexibility, higher profit margins and improved patient care can be achieved through strategic relationships.

That being said, you don’t want a strategic relationship with just anyone. Strategic relationships that align the capabilities and interests of two different entities can enable both organizations to deliver better service and better products. In today’s complex and dynamic healthcare marketplace, agility, efficiency and quality are the new drivers of success, and leveraging strategic relationships can turbo-charge performance.

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Productivity + Risk Management = Success

“Many of the major shifts (in healthcare) over the past decade can be characterized as focusing on bulking up pieces of the healthcare puzzle and on squeezing out inefficiency, but in the coming decade we can expect the shifts to be more systemic—rearranging pieces, adding new players, and changing the very definitions of efficiency and quality,” writes Ron Adner, Ph.D., Professor of Strategy at Dartmouth College.

Efficiency, productivity and quality define success not just in healthcare, but across industries.

In fact, a recent working paper from the Congressional Budget Office found that the magnitude of the financial impact U.S. hospitals will face in the future depends on how much they can improve their productivity over time. The CBO paper concluded that if hospitals are unable to increase their productivity or otherwise reduce cost growth, the share of hospitals with negative profit margins will rise to 60% and their average profit margin will fall to -0.2%.

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The “Always-On” Supply Chain

The “2016 MHI Annual Industry Report,” developed in collaboration with Deloitte, looks at the key changes in supply chain. This year’s report covers a number of disruptive technologies affecting the supply chain and reflects the views of almost 900 supply chain leaders. 

The key focus of the report is the concept of the “always-on” supply chain, which is described as “an integrated set of supply networks characterized by a continuous, high-velocity flow of information and analytics, creating predictive, actionable decisions that better serve the customer.” The report points out that the always-on supply chain has the potential to deliver significant economic and environmental rewards, which should encourage further innovation.

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What Payment Model Should Replace Fee for Service?

We all know that the United States is in the process of radically changing how it pays for healthcare. And that’s because nearly all experts agree that the prevailing current payment method—fee for service—fuels waste, and does nothing to promote high-quality care.

In an effort to drive quality and reduce waste, there have been ongoing efforts by both the federal government and private insurers to reform payments, which have produced some success along the way.

What is the best approach to replace fee for service? The Harvard Business Review recently asked that question and presented the two leading economic models that are contending to replace fee for service.

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Find Good Partners and Innovate if You Want to Stay on Top

Resting on your laurels isn’t the way to stay on top of your game, according to three leading healthcare CEOs who spoke at a recent Not-for-Profit Health Care Investor Conference. They’ve lead their organizations to success by keeping their eyes peeled for new and better ways to do things. This topic really appeals to me.

These CEOs seek ideas from both traditional competitors and from other industries. Rodney Hochman, M.D, CEO of Providence Health & Services advises healthcare leaders to “shamelessly steal” good ideas from other industries and Michael Dowling, CEO of Northwell Health urges hospitals to share their own innovations with other businesses that might benefit.

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Never Under-Estimate the Value of Proactivity

I was very gratified to participate in the Becker’s Hospital Review 7th Annual Meeting. I had the opportunity to introduce a keynote panel, whose topic was “Key Strategies and Trends,” and I also participated in a panel that explored “The Biggest Issues and Opportunities for Healthcare.”

I came away from the conference invigorated by the new ideas we all shared. When I got back to the office after the meeting, there was a letter from Scott Becker that reiterated what I would consider the one main point to highlight: That a real differentiator between surviving and success is proactivity.

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