Strategy for a Change

As the health care world changes over the next five years, leaders will need to develop and articulate strategies that move their institutions toward success. Their instinct will be to create plans that focus on maintaining what they have done in the past: providing the same services to the same clients, with the same delivery structures and being paid in the same way. Such an approach will not lead to much change and it will not make a significant contribution to the overall improvement of care in the US. If truth is told, such efforts will not even contribute to the long-term successful positioning of their institution. Health care leaders should take the time to develop the ability to ask more fundamental questions about all of what their organization does, but four particularly critical areas are: business model, practice model, human resources, and partnerships.

All parts of health care exist in a business or financing model. But whether this model is the black box of hospital finance or the crazy quilt, catch-as-catch-can financing scheme of the community clinic, they are all inordinately complicated, counterintuitive and some even contradictory to the needed outcome. To move beyond these approaches--which look to grab financing wherever it is available--to one which is more rational and intentional, will require every health care institution to work hard to understand and explore its core business model. I realize that such a term is offensive to many in health care, but it is exactly the avoidance of asking such first order questions that has masked so much dysfunction in health care. Developing a clear business model does not mean making health care turn a profit. There is nothing to my mind inherently wrong with making a profit, if the profit is made by providing a customer a needed service, in a manner that satisfies their desires for consumer satisfaction in areas such as convenience, effectiveness and quality at a price that is affordable. But not-for-profit health care institutions would be just as well served by such a realignment of their work. Some of the basic business model questions are: What services do we provide and to whom? Who pays us for these services? How do we understand what our various customers really desire, need and have the capacity to pay for? What alternatives do these customers have to meet these needs, particularly from providers outside of the “normal” range of competitors? Do we have special skills, relationships or positions that can become elements of a more intentional business model?

There are many more questions, but they all get at fundamental issues of: what do we do, who values this and how much are they willing to pay for these services. Until health care institutions can get to this basic value proposition, they will be vulnerable to being supplanted by more nimble players currently on the field or new entrants to the competition that see the opportunity in responding differently.

Integrated into the core of a business model, but worthy of special note here is the way in which production is organized. In health care we call this the practice model, which is the way we organize ourselves to produce a unit of care. We have practice models across the continuum of services provided by health care from primary care, to hospital service, to rehab programs. When we change the way we get our prescriptions filled from going to the local pharmacy to using mail order we have changed the practice model for drug delivery. Such a practice model is embedded in a larger business model. For much of health care we have lumped all of the services into big conglomerations that are supposed to provide all of the services needed and do so in a way that produces effective and safe care. But this rarely happens. A single approach to primary care provides less intensive services to the few who really need the attention and too much for the large number that only need a few occasional services. The hospital care model has everything under one roof, but rarely is anyone really coordinating the care, involving patients and families and moving the work toward a shared outcome. The aggregated care model is largely dysfunctional and requires customers to buy everything, rather than those services they need and value.

To change the few large amorphous practice models to ones that might become more effective, it will be essential to focus on some important aspect of care that could use innovative models to arrive at new outcomes. Rather than thinking about hospital care or primary care, it might be more useful to think about care in a more segmented fashion such as managing critical care, delivering specialized surgery, providing services to manage chronic care in the community, providing wellness services, offering generic pediatric primary care at convenient locations, providing the continuum of long-term care options and services, offering a full set of patient and family services around end of life care, being a vendor to patients to help them understand and manage their health information, or providing consumers with ways to evaluate and purchase clinical and financial services associated with managing their health. The hospital or primary care service might think about their work in these ways, but these services could also be offered by hospice, health clubs, hospitalists practices, nursing professional associations, information vendors, large retail outlets, schools and online vendors. To make the practice model become more dynamic, four of its core elements need to be in play: professional role, consumer role, knowledge and technology. All new practice models will use technology to move knowledge around in new ways, redefining the role of both the patient/consumer and the professional/provider.

Another actionable item that will need to be a part of new business and practice models is the set of strategies around human resources. Most health care institutions focus their HR strategies today on hiring and maintaining their workforce. There is a sort of plug and play mentality--a nurse here, a doc there, a medical assistant over there--all to fill the practice models as they have always been. Clearly changing the practice model means new professional and worker roles, so it will be incumbent for innovators to also think differently about how they get their staff, what they expect from them, how they are supported and how they develop over time.

There are three dimensions of human resources strategies that need to be reconsidered. First, health care should be more intentional in their selection and hiring practices. Too often the decisions are made based on credentialed status and availability without combining these qualities with the other work and culture skills that will be needed for the professional worker in the emerging practice model. For instance, if health care wants to respond to the consumer needs of the patient or wants to have workers that can solve problems and think critically, then these qualities should be selected for as decisions are made about the candidate pool. Next, if an institution’s strategies are directed to new business or practice models, then the workers who are responsible for bringing the strategy to life will need new skills, competencies, abilities and even values if the effort is to succeed. It is great to commit the institution to adding new value through interdisciplinary teams, but just having rhetoric about teams does not produce a group of people that are skilled, directed and committed to teamwork. Perhaps the people we have hired in the past should understand how to work in teams, but clearly they do not, so if an institution wants such a strategy to become real, then it will need to make investments in developing this capacity. Finally, accessing, storing, and using information in new ways will remake much of practice. For the most part, the new systems of information are only reinforcing the existing practice models, not becoming the disruption that leads to something new. If this is to happen, access to the information resources will need to be made more widely available to other providers and workers and even the consumers.

The final strategy frame to reconsider is partnerships and alliances. Over the past fifty years health care has built an exquisite kingdom of small institutional and professional fiefdoms that protect the guild interests of the incumbents. To meet the emerging expectations of lowering costs, improving quality and making the customer smile, will require reaching out to others to create new ways of bundling services. Today most institutional leaders busy themselves with developing rationales as to how their fiefdoms can do it all, rather than developing a clear sense of what “it all” means in their world, what they are truly and objectively good at and then facing the inevitable conclusion that they are only a part of the answer and they will need work well with others in order to meet the criteria for success in the future. Every profession and every institution will need partners. But understanding which type is needed and which of those is best, is an art that most health care organizations have not developed in the past. Clarity about direction, assessment of core ability, careful screening of the partner for skills and culture, and a commitment to creating something new, not propping up what we have, are going to be essential for success.

Leaders in health care need to be more strategic today, but their efforts need to be in the context of what is emerging, not what they have been good at in the past.