Understanding and preparing for organizational healthcare change.

by | Oct 24, 2022

A few weeks ago, I wrote about the McKinsey Healthcare Conference and how it highlighted the healthcare storm on the horizon, including how it developed and how to best weather it. Today, I want to share thoughts from some of the compelling conversations I continue to have with a number of healthcare systems and leaders across the industry to help organizations better understand how they can navigate the changes necessary in healthcare.

I’ve spent much of my career working in multiple related industries focused on industry-level and global-scale transformation initiatives. In my life sciences experience, transformation was driven by declining productivity and economics. In R&D, it was driven by changing regulations and advancements in targeted treatment therapeutics. In education, transformation was driven by new modalities for learning, a focus on professional education and reskilling, and academic institution outcomes that prioritized preparing students for a career in their chosen field. 

As I’ve observed industry shifts throughout my career, I’ve noticed transformation is frequently driven by economics, consumer priority shifts, and digital advances, as well as other circumstances that have created a catalyst for change. The current storm in healthcare–driven by COVID and economics–is this industry’s catalyst. What lessons, then, can we take from other industries to apply to healthcare?

Adopting cross-industry learnings.

There are four primary things I’ve seen resilient companies do earlier than their competitors in times of change:

(1) They accelerate decision-making. Quick decisions involve risk. It’s a “fail fast and learn” model that is rarely applied in the healthcare industry. But when aligning healthcare metrics and incentives, that risk can be rewarded with increased productivity, better patient experiences, sustainable innovation, and positive economic outcomes. Additionally, quick decision making and experimentation will yield optionality for an organization that is both operationally feasible and financially viable. 

(2) They embrace new ways of working. By rethinking organizational structures and processes, companies can drive better productivity and efficiency. This often requires adoption of new technologies—with a focus on digital strategies and insights derived from analytics. Organizations must also learn to “let go” of the traditional working models to introduce new, more efficient ways of doing things.

(3) They rebalance the balance sheet. Organizations that reprioritize capital expenditures to building new initiatives that create scale and opportunity (e.g., focusing on virtual care delivery instead of expanding geographies in healthcare) see substantial savings and more long term financial sustainability. Additionally, capital efficiency will create opportunities to invest in initiatives that can expand services and create new revenue streams.

(4) They pursue strategic growth. By innovating on product and services offerings—as well as considering/completing mergers, acquisitions, and alliances—organizations are poised for growth. Typically, through times of rapid transformation, new entrants will come into the market, threatening to disintermediate existing players. This makes reinvention and competition a high priority to ensure survival. 

If we transfer that thinking and knowledge to the healthcare industry, we can more confidently navigate the necessary change we are all facing now and in the future.

A fundamental redesign of healthcare models.

While the previous generation of healthcare transformation was about creating the electronic healthcare record, this generation requires an approach that keeps patients, clinicians, and caregivers at the forefront. Success does not simply involve layering on new and extra technologies to enhance clinical record keeping and revenue cycle initiatives, it depends on innovation and truly understanding consumer wants and needs—and rising to meet those new expectations.

Some might question why innovation is necessary at all. Peter McCanna, Baylor Scott & White says, “The tools are different now, and they’re radically different than they were 5-10 years ago. Consumerism has also changed. We now expect services when, where, and how we want them.”

As McKinsey Institute experts explain, healthcare is not a supply business; it’s a demand business. We don’t build hospitals and then figure out how to fill them up any more. We need to better understand what our consumers want and need, and then build out a system to meet those needs. That requires moving from a patient to a customer mindset: If we serve our customers, we’re going to create loyalty. Loyal healthcare customers return to the same providers that served them and their families well and share their good experiences with others. Loyalty is also built through trust, and trust creates a place where consumers will want more products and services.

Creating change requires painting a clear picture for your organization that illustrates where you’re succeeding and where you’re not. That picture requires customer insights to articulate what the pain points are and the specifics of each one. For example, do those pain points include access, navigation, personalization? Those answers will help drive an expansion of products and services that reach outside the current mode of operation and beyond.

The healthcare industry is unique in its fragmentation. Even when innovative ideas are brought to the forefront, it’s inherently difficult to scale them across the industry. And it’s unfair to expect caregivers to absorb all the changes on their own. We need to create and ensure seamlessness in technology. As Christopher Chen, CEO of ChenMed says, “Technology is the only way you can be successful in a value-based environment.”

Healthcare organizations are, by nature, considered to be highly reliable. Caring for individuals and communities must be handled with expertise, compassion, and the highest possible standards. That’s why there’s a tendency in healthcare to say everything has to be perfect before moving forward. That kind of mindset is a huge barrier to growth and scalability. High reliability should be the standard in care delivery, but experimentation and urgency must be embraced because they are vital to lasting transformation.