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America’s Hospitals Face Doom –  This year may be the last chance to save them

America's Hospitals Face Doom
by Sheila Talton | 
Original Article

Hospital executives might be inclined to shrug at news of Apple setting up its own health clinics for employees. The 84,000 people working for Apple in the U.S. are a collective drop in the bucket for a healthcare system with some 300 million patients.

It’s true Apple alone is not going to break the system, but it could be the first tumbling rock before a landslide transforms the healthcare landscape. A more appropriate response from hospitals would be a determined effort to disrupt their own business model before outside innovators beat them to it.

Looking Beyond Savings

In an industry long dominated by the same players, this requires an openness to the reality that things change faster these days, and that companies that can’t keep up get left behind faster. It’s a lesson that’s been learned time and again in the private sector but at an accelerating pace, whether with Blockbuster, Compaq, Kodak, or Sears. Complacency is often the last step on the path to irrelevance.

It’s not like hospitals haven’t been trying to innovate themselves out of trouble, and an elite cadre are making real progress. But from my perspective on multiple corporate boards outside of healthcare, and based on what I’ve seen as CEO of a healthcare startup, more hospitals need to look beyond how to save money and stay stable — they need to become agile.

Stripping Down to Agility

Agility looks like the deceptively big predators circling them. Amazon appears to be a giant company that tries to do everything, but in reality, it focuses very narrowly on one thing it does very, very well — online retail — and then outsources almost everything else, not just to save money, but to get the very best of what they need immediately. They are big, but they are a nimble cloud of companies rather than a monolith. This is exactly what hospitals need to become.

Until now, most hospitals have tried to consolidate to achieve economies of scale — think of HCA and Tenet’s advances, or Mayo Clinic and Partners Healthcare, which have been echoed in numerous regional markets. Or they have outsourced non-medical operations like food service, parking lots and maintenance. But this does little to make them more agile in their core business of clinical care. That is where hospitals should be obsessively and narrowly focused.

Partner for Everything Except Care

Hospital executives should constantly be asking how their medical staff can best care for patients, and then make investments and forge partnerships that make that possible. That does not mean hiring an in-house team to design a new cafeteria or re-arranging other deck chairs. It means having an innovative and well-equipped medical staff with a clear mission, and a network of outside companies taking care of everything else and helping them achieve it, making everything else aligned with the care. That’s not just outside partners who can do the work for less, it’s outside partners who can help them do it better and faster and make the patient experience and patient outcomes better. We’re not there.

If there’s one certainty about the Darwinian future of healthcare, it’s that those able to harness the possibilities of focus and technology will eventually prevail. If hospitals don’t figure it out quickly, the likes of Apple and Amazon will.

Sheila Talton is president and CEO of Gray Matter Analytics and serves on the boards of companies and nonprofits including Deere & Co, Wintrust Financial Corporation, and Chicago’s Northwestern Memorial Hospital Foundation.

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