What Can Healthcare Learn From Other Industries? 5 Lessons

Share on Facebook
Healthcare reform is pushing the industry into uncharted territory. Healthcare providers must make decisions without precedent, and consumers are savvier than ever. Change this monumental cannot be achieved in a vacuum or with an insular approach. As a result, healthcare is borrowing lessons and business models conceived and implemented within other industries: hotels, automakers, media, retailers, service providers and financial institutions. As disparate as these fields may be from healthcare, they share the oldest and most basic economic concept: supply and demand.

Richard Afable, MD, president and CEO of Hoag Memorial Hospital Presbyterian in Newport Beach, Calif., takes a basic perspective when comparing healthcare to other industries. "It's almost primal," he says. "The rules of supply and demand and consumerism are almost like gravity. They will always win the day. What's changing in healthcare is on the demand side. What people, employers, the government and retiree groups want is changing. That's what we're thinking about going forward. We're not trying to think about how to best adapt to [healthcare reform]."

What do hospitals, hotels, restaurants, newspapers, banks and automakers have in common? More than you might think. Here are five healthcare lessons with roots in other American industries.

1. Lesson: There are simultaneous demands for standardization and personalization, and both must be met.
Examplars: Retail, restaurant and hospitality industries.

Reduced reimbursement is forcing hospitals and other providers to "do more with less," reinforcing the need for productivity and efficiency. Healthcare has already been characterized as one of the most widely inefficient sectors in the economy as it is, and many economists are looking to the retail, restaurant and hospitality industries as models to change that.  

Some of the industry's brightest minds are exploring the connotations behind "big medicine," suggesting it does not have to stand in stark opposition to patient-centered care. Big medicine is a term used to describe standardized care delivery, often in large, integrated health systems with hospital-employed physicians.

Atul Gawande, MD, a surgeon at Brigham and Women's Hospital in Boston and regular contributor to The New Yorker, made waves this summer when he compared modern healthcare delivery to The Cheesecake Factory, praising the chain restaurant's quality food, predictable experience and reasonable prices, and finding fault with healthcare's versions of all three.

"We can bristle at the ideas of chains and mass production, with their homogeneity, predictability and constant genuflection to the value-for-money god," Dr. Gawande wrote. "Then you spend a bad night in a 'quaint' 'one of a kind' bed-and-breakfast that turns out to have a manic, halitoxic innkeeper who can't keep the hot water running, and it's right back to the Hyatt."

Dr. Afable says the strategies of big medicine — while gaining recognition — do not generalize well and aren't a conclusive solution. He maintains that healthcare providers need to master two types of care delivery: factory-like efficiencies for predictable procedures and the customized care coordination for specialized cases. For example, a 65-year-old, relatively healthy patient in need of a knee replacement has different needs than an 85-year-old nursing home resident with underlying dementia, heart disease, diabetes and no family in the area.   

Healthcare providers must be cognizant of these distinctions while balancing demands for increased efficiency and standardization. "A knee replacement is a perfect example of [a service] in which the creation of a consistent, highly predictable product at an affordable cost is the best care possible. There are many things in healthcare that go that way," says Dr. Afable.  

2. Lesson: When provided with more convenient delivery options that do not compromise quality, consumers change habits in a heartbeat.
Examplar: Retail industry and media.

Healthcare and retail are increasingly intertwined, but particularly with the current boom of urgent care centers and retail clinics. The fact that Mayo Clinic is looking into care delivery settings within the Mall of America in Bloomington, Minn., is a living analogy for the intersection of the two industries.

Some of America's most prominent hospitals are expanding into suburban malls and drugstores, and for good reason: The number of patients visiting retail clinics rocketed from 1.48 million in 2006 to 5.97 million in 2009. That's more than a four-fold increase. Along with retail clinics, patients recognize the value in alternative healthcare delivery, like telemedicine. One company called HealthSpot is even rolling out a combination of retail care and telemedicine in its Care4Stations, which have been described as "ATMs for healthcare."

Patients have more choice in how, when and where they receive care, and they're prepared to walk away from hospitals that don't meet their expectations, including expectations of convenience. In a recent PricewaterhouseCoopers survey, 34 percent of consumers said they would change their habits based on their healthcare experience.

"We didn't expect to see patients voting with their feet as much as we did. In general, for most industries, 25 to 35 percent of people are willing to change given their experience," says Paul D'Alessandro, leader of the customer and patient experience practice at PwC. "People are saying, 'You know what? I have a [healthcare] alternative today that I didn't have in the past.'"

This trend mirrors major changes in entertainment and book retailing that have accelerated over the past five years. The accessible and convenient nature of tools and outlets like NetFlix, iPads, Kindles, OnDemand television, Hulu and YouTube helped shove bricks and mortar stores like Borders and Blockbuster into bankruptcy. There is a similar parallel in the newspaper industry, as readers continue to gather news from social media and websites opposed to print subscriptions.

3. Lesson: Consumers expect risk management and security innovations in new delivery platforms.
Examplar: Banking industry.

Banking and healthcare information technology share a variety of parallels. Both deal with highly sensitive information, so consumers' banking habits are suggestive of the demands they will place on HIT. Consumers are beginning to expect their healthcare experience to resemble their banking experiences, but share in common thread in that they expect high security and risk management from both industries.

Automatic teller machines — which first went into use in the 1970s — are to banking what electronic medical records are to healthcare. Now, more consumers are transitioning to online and mobile banking and are happy in doing so: A 2011 study found satisfaction with online banking overall was 83 on a 100-point scale.

Americans' trust and satisfaction with EMRs hasn't progressed at the same pace, however. A 2012 survey conducted by Harris Interactive found 85 percent of Americans have anxiety over EMRs, and half are worried that their health data can be lost, damaged or corrupted. These qualms aren't unfounded, as other data revealed the top six data breaches of 2011 involved healthcare organizations. In the future, consumers will demand electronic access to healthcare data, just as they do with their financial data, but this demand cannot be met unless security issues are addressed.

Another example of patients expecting similar experiences in healthcare as they experience in banking is the way in which consumers have come to expect risk management in individual care delivery. Benchmarks and comparative data are especially valuable as healthcare providers are expected to place more emphasis on potential hazards. For instance, patients want to know more than their blood pressure numbers; they want to know how those figures compare to others in their age group.

"In the past we were asked our net worth. Today, we might be asked our FICO score," says Mr. D'Alessandro. "There are lines of comparison [in healthcare] driven back to the banking industry, and consumers are saying, 'Banking is helping me understand my risk — why aren't you?'"

4. Lesson: Precision and excellence in basic tasks may influence consumer satisfaction more than elaborate amenities.
Examplar: Hospitality industry.

The federal Value-Based Purchasing Program has tightened providers' focus on patient satisfaction, and the provider-patient relationship in particular. VBP, which goes into effect Oct. 1, ties a portion of hospitals' Medicare reimbursement to their performance on 12 clinical outcome measures and eight metrics from Hospital Consumer Assessment of Healthcare Providers and Systems scores.

These HCAHPS metrics include communication with nurses, communication with physicians, staff responsiveness, pain management, communication about medications, discharge information, hospital cleanliness and hospital quietness. While hospitals may encourage regular rounding and measure the frequency of provider-patient interactions to boost HCAHPS scores, some patients may still leave the hospital with experiences most affected by how often their rest was disturbed.

Provider-patient relations initiatives — commonly high-cost interactions — will have little return on investment for these types of patients, especially if the initiatives' narrow scope leads hospitals to skimp elsewhere along the quality spectrum.

"[Hospitals have] to spend their money in the right place," says Mr. D'Alessandro. "In some hotels, you'd walk in and see the doorman, the concierge and high-end services in the lobby. But the reality was that people checked out of the hotel and weren't happy about how their room was cleaned."

The lesson here is that while some hospital patients may be swayed by a hospital's customized food, valet parking or panoramic views, these supplementary perks cannot take away from providers' performance in the most basic elements of care delivery. Like hotels, hospitals may first want to ensure they have mastered the main HCAHPS measures before spending on more lavish features.

5. Lesson: Industries must adopt new communication tactics when performance information goes public.
Examplar: Education.

The language, criteria and method for how hospitals differentiate themselves from one another — and consequently "sell" themselves to patients — has changed due to the availability of information. Quality and performance data has broadened the stage for comparison. Before, hospitals may have competed with a cross-town competitor over certain quality metrics, but those dynamics have since expanded on regional and national levels.

The geographic expansion coincides with the rise of new ideology, such as preventive care and patient-centered delivery. "Hospitals are looking for leaders who can deliver that language," says Peggy Naas, MD, vice president of physician strategies for VHA. "It's very different from saying, 'We have X number of beds filled today.'"

Dr. Afable recalls the day of pen and paper prescriptions and how physicians' orders were rarely legible to patients who would soon be taking those medicines. "There was a reason for that," he says. "The consumer wasn't supposed to be aware. Consumers had none of the knowledge to affect demand. They had no skill or ability to know what they wanted, what they deserved or what they were paying for. The system was perfectly designed so the consumer was not a part of the healthcare delivery equation. Information has changed all of that."

This trend is similar to reviews of any product online — cars, restaurants, blue jeans — but holds close resemblance to ratings of public and private schools across the country. Each state has a variety of websites dedicated to showing school-by-school comparisons of students' performance on state exams and also rating individual teachers.

When this type of data went public, some education leaders struggled in how to define, communicate and explain their scores. For instance, when the Texas Education Agency unveiled annual "accountability ratings" for the state's public school districts, some school officials faced a dilemma: How they would explain their low ratings to parents and taxpayers?

Many hospitals are reinforcing increased provider-patient communication: Some are hiring chief patient experience officers (hailed as the new executive "must-have") or medical communication specialists to make discussions about services and costs less intimidating and jargon-filled.


More Articles on Healthcare Industry Trends:

The Future of the American Hospital: Role and Relevancy in the Next Decade
Chuck Lauer: 10 Observations on the Affordable Care Act and Our Future
The Quiet Takeover: Insurers Buying Physicians and Hospitals


© Copyright ASC COMMUNICATIONS 2012. Interested in LINKING to or REPRINTING this content? View our policies by clicking here.

 

New from Becker's Hospital Review

Think you have a bad boss? 5 things to consider

Read Now