Innovation Strategic Planning

I recently did a seminar for CEO’s of a set of fifteen rural hospitals, specifically Critical Access Hospitals. I tried to make the point that true strategic planning is vital at this moment in the health care industry and then get into how they might enhance the value of strategic planning for their organizations. Unfortunately, I think I was only marginally successful.

My rationale was that hospitals, particularly rural hospitals, are encountering a sea of change that has them at the effect of a number of forces they cannot control. In such a circumstance, any organization – whether healthcare or not – has two strategic choices: 1) view threats as only that and plan strategies to minimize their effects (victim mode) or 2) see threats as an opportunity to separate themselves from those who are less innovative, less flexible, and thereby grow their business.

The forces that are pounding on rural hospitals at the moment include the following:Rural Healthcare

  • The Federal government (CMS) is actively maneuvering to financially penalize what they consider to be sub-standard performance through Value-Added Pricing, payment for outcomes and a number of other initiatives.
  • Provider coverage in rural settings is being impacted by desired lifestyle changes of young providers, i.e. they want a different work-life balance
  • There is a trend of patients migrating  to urban centers for specialty and inpatient treatment
  • The gap is growing between new diagnostic and treatment technology and the ability of small hospitals to finance staying current. This exacerbates provider and patient self-referral to urban centers.

So, why do I recommend not throwing in the towel on planning? What should be done? Here are some thoughts on the changes that need to be made/planned for:

  • Create true, integrated, seamless networks (a.k.a. Kaiser Permanente, Mayo Clinic) that can avoid endless referrals amongst independent practitioners.
  • Design a system with two separate hospital business models. The first type are “tertiary” hospitals designed to field all health problems and both determine what is wrong and render life saving care. There should be few of these – in rural communities none – as they  are very high cost operations. They must be equipped and staffed to handle any type of problem, and there is no predictability as to what type of problems will appear and in what volume. The second type of hospital would be those that render care after the initial problem solving or diagnosis. These facilities would specialize, e.g. only orthopedics or even a sub-set of orthopedics, only heart surgeries, only cancer or even sub-sets of cancer. These can be staffed and equipped to handle a predictable type and volume of care. The effect would be to reduce the cost of routine care (estimated to be 60%), improve quality (specialization equals proficiency) and greatly reduced malpractice. For more information on these two models read Clayton Christensen’s brilliant book, The Innovator’s Prescription: A Disruptive Solution for Health Care. New York: McGraw-Hill, 2009.
  • Maximize provider use of technology (e.g. telemedicine and on-line clinical protocols) to aggressively move providers at all levels to the very top of their license and beyond, i.e. nurse practitioners doing what primary care physicians have historically done, primary care physicians carrying on the more routine specialty problems, etc. Maximize technology also so that EHR’s  can talk to one another and be shared across the full spectrum of providers. (again brilliantly laid out in Christensen’s book)

These types of changes, if implemented and rewarded vs. penalized by reimbursement mechanisms, could create a bright and bountiful future for small hospitals/primary care centers.

In addition, no one has successfully separated themselves from the field when it comes to dramatic improvements in chronic disease. Innovation and cracking the code of getting patients actively involved in managing/improving their conditions remains fertile ground for innovation and thereby growth of market – a prime target for strategic planning initiatives.

All of this requires getting out of the victim mind-set and getting in touch with what patients are really seeking from health care providers, understanding their true satisfiers/dis-satisfiers and examining what alternative solutions they are employing/seeking because of the current failure of the health system to deliver. It also requires true entrepreneurship, i.e. the willingness to risk failure to find a solution that really works.

Interested in leaving victim-hood behind and pursuing true innovation? We would be happy to help get you started. Contact us here.