Future of Healthcare

What the Future Holds

We are now well into our fourth calendar month since the COVID-19 pandemic fully arrived in the United States.  On the one hand, we have worked to adapt to a new normal.  But, more so, we are weary of pandemic life and all that it has wrought.  Making all this more difficult is the uncertainty of what lies ahead.

Despite this challenge, it is incumbent upon healthcare leaders, and other key policy makers, to look forward.  This will help us take the steps back towards our old lives – albeit with certain likely permanent differences – but also prepare for the many potential eventualities that we may confront.

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Will 2020 be the Year of Healthcare Transformation?

Transformation. Disruption. Words used to describe radical change.

These same terms have been bandied about to discuss what needs to happen to the American healthcare system; change that makes for a demanding proposition and one that will require continuous effort.

A recent Op/Ed in Modern Healthcare by Jonathan Manis, SVP and chief information officer for Irving, Texas-based Christus Health addresses healthcare’s incomplete progression toward transformation.

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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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