It’s an amazing time to be a part of the transformation of health care. An industry that once changed at a glacial pace is now moving forward at breakneck speed, adopting new technologies and strategies from other industries to drive clinical, operational, and social advancements.


Executives are increasingly concerned about costly fixed assets, an evolving labor force, and rising payer and consumer expectations. Transforming and disrupting our industry is a necessity and will require new ways of doing business, with focused strategies that place patients’ needs at the center of the health system’s mission. Healthcare organization leaders should keep several key considerations top of mind this year.

Transformation, not incrementalism. The complexity of a healthcare delivery system serving patients across multiple ZIP codes rivals that of a Fortune 50 organization operating in dozens of countries. Yet health care lags in adopting sophisticated digital design tools to manage these complexities and stem the industrywide decline in operating income. Burdened by expensive fixed assets, redundancy, and inefficient utilization levels, health systems need a major course correction if they are to provide 24/7/365 access, shift care to virtual and lower-cost settings, manage new competitive threats, and meet rising consumer expectations. Becoming 2 to 3 percent more operationally fit each year will not keep pace with the rate of change required.

To survive, organizations must determine what businesses they want to be in and how they want to deliver their services, and they then must design and implement a care delivery model that differentiates them from their competitors from operational, cost, and service-level standpoints. Walmart’s promise of “Everyday Low Prices” and Amazon’s same-day delivery are good examples of analytics-driven strategies that combine a strong brand promise and operational excellence to delight consumers, stay competitive, and control costs. Incrementalism is the enemy of healthcare organizations transforming their business models. These organizations must put considerable thought into what really matters to patients, align their brands and service levels accordingly, and then consistently execute on transformative strategies that deliver on customer expectations.

Apps to support healthcare providers. There is high demand for analytics apps to inform and address clinical and operational issues in real time, leveraging technologies such as artificial intelligence (AI), machine learning, and natural language processing. The issue for most professionals is not data availability—it’s accessing the right amount of relevant data when and where it’s needed. If information is buried in the electronic health record or another IT system, it might as well not exist at all. Liberating the most relevant data in real-time and presenting it in a simple, accessible way will help professionals focus on key processes, such as managing patient flow in the emergency department and aligning critical activities to keep patients safe. Most important, these apps don’t just highlight the problem; they inform actions on how to mitigate or solve it.

More precise health care. Some of the biggest challenges (and opportunities) in health care revolve around improving patient outcomes and operational productivity. Today, lack of tailored diagnostics leads to wasted exams and treatment delays, preventing true value-based care delivery. Our nation’s annual excess cost of waste from disjointed, siloed care has topped $700 billion.a Precision health—better outcomes delivered more efficiently—shows considerable potential in addressing these and other issues. By leveraging data science, medicine, and technology to enable precise, predictive, personalized care, organizations are empowered to do the right thing, at the right time, for every patient, at scale.

Big data and AI are foundational tools in precision health, and adoption in health care is accelerating. For hospitals and health systems, the advantages are clear. Applying precision health to optimize care pathways could enable better patient outcomes while unlocking $500 billion in value over the next decade through higher productivity.b

Collaborative disruption. Given the complexity and high stakes of health care, a partnership approach to solving thorny issues around quality, cost, and access seems only logical. Even Amazon—known for innovative disruption on its own terms—has enlisted a blue-ribbon team of experts to guide its entry into the industry. The company’s healthcare venture with J.P. Morgan and Berkshire Hathaway to reduce the healthcare costs for their employees, along with the acquisition of PillPack, new health information data mining capabilities, forays into supply chain management, and expanded use of Amazon’s cloud-based voice service, Alexa, into healthcare delivery are all indicators that Amazon sees an opportunity to disrupt traditional healthcare channels.

Similarly, we see innovation-focused, outcomes-aligned relationships between health systems and vendors as the evolutionary next step in creating sustainable value in a highly unstable market. An outcomes relationship enables true risk-sharing. Success comes from achieving mutually agreed-upon financial, quality, and patient experience metrics, where the two organizations are co-resourced and co-governed to ensure they have shared objectives and both have a meaningful stake in achieving organizational success.

Core competency, outsource, partner—or avoid. As healthcare executives contemplate their business strategies, they must manage countless competing priorities and external pressures to service their mission, communities, and employees while remaining good financial stewards of their resources. They constantly face decisions around core competencies and objectives regarding matters such as employing versus affiliating with physicians, buying versus renting, and going it alone versus partnering to deliver post-acute care. In other industries, non-core functions are more often outsourced and strategic actions like divestitures, and partnership agreements are commonplace. In health care, however, we see a growing trend for executives to succeed based on saying “no” and making tough choices on things they have not considered before. Although decisions whether to insource or outsource are complex in health care and the results often not popular, such decisions must be made. Staying true to the organization’s strategy and missions will be critical when making these tough choices.

Looking Ahead

Health care’s evolution over the past decade has been astounding, but even more amazing changes lie ahead, with the focus on delivering precision health, building world-class operations, and delivering care as cost effectively and safely as possible. More progressive healthcare organizations are seeking out and adapting strategic approaches, tools, and technologies that have proven successful in other sectors and using them to thoughtfully redesign or supplant legacy processes that are no longer working. Innovation that is both deliberate and disruptive is essential to transforming healthcare.


Geoff Martin is a managing partner and COO of GE Healthcare Partners, Chicago.

Footnotes

a. Institute of Medicine (US) Roundtable on Evidence-Based Medicine, Yong P.L., Saunders R.S., Olsen L.A., eds., The Healthcare Imperative: Lowering Costs and Improving Outcomes: Workshop Series Summary. National Academies Press National Academy of Sciences, 2010.

b. Singhal, S., and Coe, E., “The Next Imperatives for U.S. Healthcare,” McKinsey, November 2016.

Publication Date: Tuesday, January 01, 2019