Is Your System Heading for Success or a Crash?

I recently saw an excellent example of offering appropriate care in the appropriate setting when I reviewed my new HORNE healthcare plan. HORNE is offering a new program called “MD Live.” For the first time, our insurance will cover employees who consult a doctor remotely by using a phone, tablet or computer. The next time I feel a cold or the flu coming on, I can visit with a doctor and get the treatment I need without traveling to the doctor’s office. 

Of course, if my complaint is more serious than a sore throat, I can make an appointment for an office visit or tests, but this new arrangement can potentially save time and money while providing me the quality care I need. Similar programs are being adopted across the country, ranging from “teleclinics” in Target stores to consultations with doctors who are physically several states away from the patient.

Such programs, however, raise questions about what factors will determine the ultimate success and longevity of healthcare organizations across the board. I think there are several indicators that divide healthcare systems heading for a crash from healthcare systems that are positioned to prosper.

These three indicators identify a system that is headed for a crash:

    • The system has duplicative services that are poorly distributed across markets.

Competition throughout markets will be driven by quality, price, brand and access. Operating two or more centers in competition with each other, when your population can only support one, is ultimately a poor allocation of resources and will weaken all the centers involved. Similarly, a high percentage of empty beds or unused office space is an indication of serious problems. Systems that intend to compete at a high level will consolidate or eliminate services that they cannot support robustly.

    • The system has overbuilt and unused capacity.

Real estate used to be an investment, but now we see it as a drag on the bottom line instead. Technology allows healthcare organizations to operate clinics remotely, making real estate holdings less important than ever. For an example of changes on the administrative side, look no farther than Texas Health Resources, one of the largest healthcare providers in the Dallas-Fort Worth metro area. The organization has divested itself of much of its real estate, and encourages employees in the revenue-cycle administrative unit to work from home, greatly reducing its need for office space.  More and more organizations are operating with fewer clinics, hospitals and land than ever before. You must examine all of your “assets” with a new eye. Are they actually assets or not?

    • The system has incompatible offerings.

The Field of Dreams adage, “If you build it, they will come” doesn’t always hold true here. You might want to serve a specific type of patient, but it doesn’t necessarily follow that you will have the business to be successful. For example, you might be in a rural area and want to put a vascular surgeon in the local hospital. If you don’t have the population to support enough surgeries, however, income will not cover costs. A poorly planned service can devastate your bottom line.  

All three of the circumstances above will lead to the death of a system because they do not provide appropriate care in the appropriate setting. The healthcare systems that will ultimately prosper, however, are dedicated to delivering appropriate care in the appropriate setting. They recognize that appropriate care is as much a competitive advantage as price or excellence or brand identification, and may be the most important of the four. As we move into a new healthcare environment, it will become more and more imperative that we provide better care for individuals, better health for populations, and lower costs for healthcare overall.


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Topics: Healthcare Quality, Population Health, Patient Care, Hospital Management

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