Time for healthcare to embrace change, let go of inpatient model
For years, Intel Corp. has been one of the most admired companies in America. With its chips in 80% of personal computers, it has totally dominated a critical vertical market.
But the glory days of the PC are over, while mobile device sales are skyrocketing. And Intel’s mobile device market share is a small fraction of its PC market share. How could a dominant company so completely miss this inflection point in the market?
The healthcare business model has reached its own inflection point—from inpatient to outpatient. For example, in the Chicago-area market between 2010 and 2012, a Kaufman Hall analysis showed that inpatient utilization decreased across all age groups and for virtually all service lines.
Healthcare providers need to embrace the complete change of mindset, structure and operations required for the shift from an inpatient to an outpatient busi- ness model. That means understanding the reasons that a successful company can find itself trapped in the wrong business model:
Not taking the market change seriously. When you are successful, it’s easy to be lulled into a sense of security. As former Intel CEO Andy Grove put it, “only the paranoid survive.”
Not wanting to ruin a good thing. As new Intel CEO Brian Krzanich said, “If you had the keys to a kingdom that generated $55 billion in revenue, wouldn’t you worry about being the one who caused the cratering of this jewel?”
Not internalizing the change. The shift to an outpatient focus requires a change in mindset far beyond setting up outpatient centers. Deep involvement in the community is required to understand and manage its health.
Inability to pull the trigger. The complexity of rightsizing your business, reengineering care delivery and transforming your cost structure is so great that some organizations find they can’t make that move—at least not promptly enough.
Acting too late. Great organizations know when to cross the chasm to a new business model. In healthcare, acting too late might limit your options for crucial partnerships, physician relationships and service area strength.
The glory days of inpatient care are over. Providers need to let go of their allegiance to the inpatient business model and embrace the total transformation required for the outpatient, community-based business model.
Kenneth Kaufman is chairman of Kaufman Hall, Skokie, Ill.