Tuesday, February 23, 2010

Strategic Initiatives for creating Consumer-driven Health Care. Hospital Leaders Guide to Corporate Strategic Plans.

For the foreseeable future, with vision of six converging Megatrends for HealthCare Industry, hospitals will be dealing with two broad categories of "consumers":
(1) commodity seekers, a category that will include trauma victims, the socioeconomically disadvantaged, and patients in need of low-acuity, elective care; and
(2) value seekers, who will base their decisions on price, quality of care, or both. The number of knowledgeable, assertive value seekers will be influenced by the role that payers assume in brokering care for their beneficiaries and providing incentives for them to seek value on their own.

Commodity seekers, by and large, will continue to show up at the hospital's door as long as cost, care, and amenities are acceptable. True value seekers, looking for exceptional providers, are likely to remain small in number. However, this does not mean they can be ignored. How many such patients would the average hospital be able to afford to lose before its narrow operating margin turned into red ink?

Although there are many steps of an operational nature that hospitals can and should be taking to prepare for consumer-driven care, two critical strategic initiatives—Professor Rumelt might call them pathways to higher performance—stand out in the short term. Specifically, hospital leaders should:
1.    Identify their organizations' clinical priorities and allocate a disproportionate share of financial and human capital to support them. For many hospitals, the days of being able to afford to be all things to all people are over. Instead of asking, "What's good to do?" hospital leaders should increasingly ask, "What's best to do?" (See, for example, this year's essays on finance and governance.)
2.    Develop a physician alignment plan that is based on more than economics and that answers the following questions:
    How can the hospital do a better job of supporting physicians in their efforts to provide effective and efficient care?
    What changes are required in the function and structure of medical staff leadership?
    What role should the hospital play in recruiting and retaining physicians? Does it need to develop a multispecialty group?
    What policies will the hospital establish regarding business collaboration with physicians (e.g., equity joint ventures)?



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