Time for health­care to em­brace change, let go of in­pa­tient model

Modern Healthcare - - COMMENT - By Kenneth Kauf­man

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.

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