Business lines in healthcare have developed according to the old reimbursement rules. Now leaders must work hard to develop an entrepreneurial culture if they are to survive and thrive.
Here at HealthLeaders, we just released our 2012 Healthcare Industry Survey, and we're quite proud of it. This is our fourth annual survey, and more than 1,000 of your colleagues donated a decent amount of their valuable time to share their insights with us.
The result is reams of free data on a variety of important trends and issues in healthcare. Anyway, I was looking over the CEO breakout survey, and something caught my eye in the context of a recent conversation I had with a consultant. We were talking about cultivating an air of innovation and culture of entrepreneurship in healthcare, which is undergoing rapid, some would say chaotic, change.
For the healthcare CEO, the risks of trying new business constructs have never been bigger. Then again, neither have the rewards.
According to the CEO report from the survey, the biggest strategic challenge facing hospital, health system, and physician group practice chief executives is care coordination and the continuum of care. This was chosen by 30% of respondents, ranking behind such big priorities as improving patient flow and patient experience, performance metrics, or hiring quality staff. It blew away reducing avoidable readmissions and complications too, for perspective.
Developing a culture, and at least as importantly, a system, for managing care coordination is foreign to healthcare organizations simply because it's never been required of them. Business lines in healthcare have developed according to the old reimbursement rules, which, never mind coordination of care, discouraged even coordination of businesses.
The goal was doing stuff, not measuring care outcomes. But I digress. Such big changes in incentives, financial or otherwise, require bold, often risky decisions about how to reorient your particular business structures.
That kind of culture does not come naturally to healthcare providers, says Ron Van Horssen, a senior vice president with The Camden Group, a Los Angeles-based healthcare business advisory firm. We had a long conversation about developing an entrepreneurial culture, and I've boiled it down to three priorities for healthcare senior executives seeking this kind of change:
1. Develop the ability to make informed change quickly (at least relatively)
Healthcare tends to need to take some pages out of other industries, Van Horssen says.
"The provider side has been inherently more methodical in terms of how it changes. In a new environment where the incentives are changing it's just critical to develop the ability to make change happen quickly."
Quickly can be a relative term, but Van Horssen says one key is setting up the ability to move more rapidly into areas that competitors may not have yet recognized, or acted upon.
Being the first mover is risky, he says, but if you do your homework and have faith that your team has calculated correctly that the risk/return probability leans toward the return side, give it a try. You will make mistakes, but as the first mover, you can course-correct with a little more leeway than competitors who are trying to catch up.
2. Realize you can't eliminate risk, but you can understand it
As providers face a new world of being more market-driven, Van Horssen says there's a tendency to almost get paralyzed from acting because you're always trying to reduce risk.
"In an entrepreneurial environment, you don't eliminate risk, you understand it," he says. "You can't completely avoid it when you're introducing new initiatives. You will miss market opportunities if you do."
He argues that inaction in this environment has real consequences.
"We've seen so many hospital and systems that are grappling with ACOs, core measures, different approaches to physician alignment, clinical integration, all tying into healthcare reform."
The problem, he says, is that these initiatives are so revolutionary that they are held up as almost reverential decisions that could represent life or death for the institution. It's true. They could, but that's no excuse for over-analysis or binding up decisions in layers and layers of bureaucracy, hoping to get everyone's ok before proceeding.
"Decisions on how to approach some of these challenges are often tied into existing planning processes that tend to take a long time," he says. "Using that process is inherently time-consuming and restricts the ability to move quickly, which is a characteristic of successful entrepreneurial environments."
3. Empower smaller groups to make decisions
The organizations that tend to be effective in all environments tend to be ones that decentralize some of the efforts at strategic change, says Van Horssen.
"What we've seen [that is] effective in some smaller innovations are those that recognize the need to create small teams and small governing boards," he says. "That's where the entrepreneurial environment thrives."
That means that if you're trying to take your board of 27 members through smaller decision-making processes such as how each service line should contact and keep up with patients' follow-up care, or even if that inpatient patient care group needs to coordinate with outside follow-up providers, there is inherent resistance to moving quickly and effectively.
"Give the execution team of 5-7 board members the ability to make decisions on how to operationalize it," he says.
That's taking a page out of what you would see in typical venture-backed or high-growth environments, where success is measured by how well the solution solves the problem, not whether all potential stakeholders have been satisfied that they've had their say.
"There's no question there's a political aspect to any organization, but the entrepreneurial organization is more focused on results and outcomes with smaller management teams. There, politics typically plays less of a role."
Philip Betbeze is the senior leadership editor at HealthLeaders.