I advise health care executives on the leading-edge strategies that will best position their organizations for success.
Health care is a dynamic industry impacted by waves of technological, regulatory, economic, social and clinical change. Many organizations are unable to effectively respond these changes. Some are behaviorally conservative, looking to policy makers and regulatory bodies to make determinations about reimbursement and operational requirements. Others are affected by the political volatility that has created uncertainty in markets across the country. Some are just too fatigued from enterprise-wide projects such as EMR roll-outs to even contemplate new ideas.
Yet change is the new normal. And I’m here to help. Here are just a few ways that we can work together:
Comprehensive cost/price identification.
Regrettably, EMRs are not cost accounting systems. As a result, providers have a handle on the reimbursement they’re getting but have very little insight into the actual cost of the care they deliver. Without a better understanding of costs, executives are hampered in their ability to make informed strategic decisions. In addition, the increase in high deductible health plans and the consumerization of health care have increased the demand for legitimate, market-based pricing.
- Do you consider the reimbursement you receive as a proxy for costs? If not, are you allocating all the fixed costs in your system down to the per unit transactions to have a true understanding of your cost structure?
- Is your organization able to provide patients with fair, market-based pricing?
- Have you been stymied in negotiations with third parties because you’re unable to appreciate the potential changes to your cost structure and operational performance?
Half of Americans get their health insurance from their employers. Private insurers, which craft many of the employer-sponsored health programs, pay providers at rates higher than the government (Medicare and Medicaid). As a result, employers are ostensibly subsidizing government programs while also paying for much of their employees’ health care costs.
- Are you, an employer, considering the development of a narrow network with one major provider in the community (à la General Motors and the Henry Ford Health System)? If so, what are the appropriate rates to pay for the services you want?
- Will you hold the delivery system accountable for the health outcomes of your employees and if so, which metrics will you use? How will these metrics be tracked?
- In the end, will you be saving money while providing better value to your employees?
Strategic acquisition evaluation.
Health care is in the midst of a major consolidation phase, with acquisitions tracking to exceed values not seen since 2007. Hospital systems are merging. Insurers are buying pharmacy (and PBM) chains. Amazon is threatening everyone because, well, they can.
- Are you buying as a defensive maneuver or are your choices really going to give you a competitive advantage in the long term?
- Are the valuations you’re looking at based on the right comparables? Is your management team expecting health care companies to behave like they do in other industries?
- And critically, have you appropriately projected the new organization’s revenue streams given the uncertainty in the market?
Health tech business plan analysis.
Twenty five billion dollars were invested in health care IT in 2017. Hopes are high that technology will drive breakthroughs in the industry. But many young (and old!) entrepreneurs don’t understand the complexities of health care and over-estimate the value their ideas will generate. Investors are hungry to get a piece of health care’s multi-trillion dollar pie, and they may not act as rationally as they should. I worked at a health care start-up in the early 2000s. I get it.
- Is the CEO’s vision too ambitious to hit the targets in the business plan or is it too niche-based to grow at expected rates?
- How much of the start-up’s revenue stream will be impacted by regulatory issues?
- What is the growth model for the business? Does it assume individuals will spend MORE out of pocket than they already do today
Facilities portfolio rationalization.
My undergraduate major and one of my master’s degrees is in architecture, so facilities and operational design are close to my heart. Technological advances, medical breakthroughs and reimbursement changes have caused a significant dispersion of delivery along the continuum of care leaving pockets of over-capacity throughout the system.
- Do you have a strategy to re-purpose the space in your acute care facilities that has been freed up due to the rise in outpatient services?
- Are you getting the most out of the community-based sites of care for your patients?
- Are low-cost outpatient locations enhancing your brand, positively impacting your financial position and critically, improving patient care? Or are they just adding more overhead to your already high fixed cost financial structure?
I am available to discuss these and many more issues driving change in the health care industry. Please contact me at email@example.com to discuss how we may collaborate to positively impact your organization.