How Much Do Healthcare Organizations Need to Improve?

Healthcare is far from an optimized industry. We have waste in the form of duplicative and unnecessary services, errors and a lack of standardization, that while possible to overcome, will take time and require a transformation of business models.

But how drastically will organizations need to change? What degree of improvement is needed?

Huron Healthcare recently put a number on what before had largely been a theoretical question: "For most organizations, that [transformation] will require improvement in the range of 20 to 40 percent," said the firm in its recent "Achieving Healthcare Transformation" report.

Twenty to forty percent represents a mighty amount of improvement. How will organizations achieve this?

To better understand organizations' responses, Huron Healthcare convened a group of health system CEOs to discuss the need for transformation and their efforts to adapt and respond.

According to the report, three key themes emerged, which may suggest a path toward success:

 

  1. Evolve ­— Transition to new reimbursement models, while cutting costs and exploring alternative revenue streams.

  2. Integrate — Create new structures that support clinical integration, which is "essential to lowering the total cost of care and achieving success in the post-reform environment," according to the report.

  3. Lead — Develop leadership talent with the competencies required for new payment and delivery models.

Most interesting of these, to me, is the proactive move toward alternative revenue streams. David Bernd, CEO of Sentara, is quoted in the report explaining his system's strategic planning now involves three parts: "The first core is our healthcare provider business. The second core is the health plan, and the third core is new businesses — entrepreneurial investments — where we can generate revenue without relying solely on revenue from third-party reimbursement."

If your organization has yet to explore alternative revenue streams — such as consulting and management services, licensing technology, monetizing research, medical tourism and more — as a significant source of future revenue, the time to start thinking about it is now. Right now.

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