The following is an excerpt from Navigant Healthcare’s Pulse Weekly. Click here for a complete copy of this week’s article.
In 2004, while at Vanderbilt, the Dean of the Owen Graduate School of Business, the Chancellor of the University and the Vice Chancellor for Medical Affairs had an idea: Vanderbilt should build a program that brings together the disciplines of business and medicine in a healthcare MBA program. After all, Nashville is home to 400 healthcare companies, and healthcare is a significant industry—now employing 14 million and consuming 17% of our GDP. I “accepted” their challenge, not knowing where it would lead or where to start.
In doing my prep, I started with the obvious: our system is highly regulated by States and the Federal government. It is fragmented, expensive and both labor and capital intense. And it’s complicated. Each sector in our system has its own glossary and view of others. Each thinks about its future, but often without understanding the inner workings of other sectors and how their plans intersect or collide with their own.
After reviewing the academic literature and interviewing a number of healthcare business leaders and clinicians, I ended up with a framework and each sector fell into one of four roles: Regulator/Administrator, Innovator, Service Provider, or Consumer. And the resulting framework was this picture:
This picture illustrates the challenge: the U.S. health system is a complex array of businesses with an equally complicated payment system of co-pays, deductibles, premiums or no pay at all.
It’s no wonder consumers can’t grasp even its basics—what things cost, what treatment options they may have, or how each sector relates to the other. Regrettably, the same is true for many who sit in the C suites and on the boards of these organizations. Most are confident about their own business, but not prepared to address linkages with the others.
The biggest challenge and most significant opportunity in healthcare is a system that’s understandable, affordable and connected by a clear set of common interests. Our sectarian tradition lends to inefficiency and redundancy; shared risk and shared values lead to new structures and fewer silos. But that begins with a vision about a system of care that recognizes the dynamics of the clinical, technological, economic, regulatory and competitive forces of change that drive innovation and pose constraints to our activities.
The transformation of the U.S. healthcare system is underway and it includes more than just hospitals that diversify. It includes inversions by biopharma and device manufacturers and increased enrollment in health insurance.
Famed journalist Walter Lippman said, “When all think alike, then no one is thinking.” That’s timely for healthcare today. Lines between our sectors are blurring. Picture this: a system of care that works well, and its costs and results widely understood and supported. We’re not close. It’s ours to pursue.
Paul
The opinions expressed in this article are those of the author and do not necessarily represent the views of Navigant Consulting, Inc. The information contained in this article is a summary and reflects current impressions based on industry data and news available at the time of publication. Any predictions and expectations noted herein are inherently uncertain and actual results may differ materially from those contained in this article. Navigant undertakes no obligation to update any of the information contained in the article.
© 2014 Navigant Consulting, Inc.
