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Take Your Place Among the Healthcare Giants

 |  By Philip Betbeze  
   July 11, 2014

Unless yours is one of the very largest health systems, you may be best served by finding your unique niche. It doesn't preclude partnerships with larger organizations, but leaders must act.

In my story for the June issue of HealthLeaders magazine, Critical Times for Small and Rural Hospitals, I wanted to profile some of the strategic decision-making that successful smaller organizations are pursuing in their drive to remain relevant in a rapidly changing healthcare reimbursement environment.

I struggled a bit to find consensus among the leaders of the many organizations I interviewed. I wanted that consensus, because I was putting myself in the position of you, the leader of a similar institution that is looking for good ideas.

I never found it, but I decided as I tried to put into words what I had learned from these conversations, that lack of consensus is not necessarily a bad thing. Because the environment for healthcare services, and what will be in demand as buyers of healthcare—whether individual patients through the exchanges or employers or giant payers—is uncertain as those customers demand better value.

That can be a positive, though. It means you can tailor your own best solutions.

Overall, I think many hospital and health system executive leaders would reluctantly agree that much of what's causing the disruption in healthcare business models will ultimately result in better value and higher quality care for patients.

Getting there as an individual institution, and tailoring your offerings to best fit this uncertain future is what's so hard.

The three institutions I decided to include in the story represent a wide variety of options to stay relevant. I'm sure there are many other strategies I haven't heard of yet that may be as promising.

Thinking Beyond Inpatients

Charles Hart and his team at Regional Health in the Dakotas—a large system, but with a large share of critical access hospitals—are seeking to work within the regulatory confines of the critical access model to create assets that aren't duplicative.

That's a tougher job than it sounds. Most rural communities see a "hospital" as essential, and won't be giving it up easily. But there's opportunity in right-sizing the footprint of those rural presences without necessarily thinking in terms of inpatients. He's challenging his leaders to "bring something unique" to the health system as they do their strategic thinking.

An Oasis for Physicians
Steve Simonin, who runs two rural hospitals in Iowa, is also trying differentiation, and while it's on a different scale, again, he's trying to help his organization stand out from the crowd. He even brings up The Matrix in terms of describing his team's philosophy, which is never a bad analogy to be able to work into a healthcare strategy story.

Though Simonin runs two hospitals, essentially they are staffed as one hospital with two campuses. That provides more operational benefits than you might think.

Secondly, Iowa Specialty Hospital (with two campuses) is being positioned as an oasis for physicians who feel the pressure to become employees of a major health system and want nothing to do with that. He says the system is becoming a destination organization for obstetric, orthopedic, and bariatric specialties. It might not work for everyone, but it's working for them.

Thinking about this stuff in aggregate is easily overwhelming. But to see other organizations take concrete steps to improve their prospects can be a great way to develop ideas of your own about how to compete.

So take heart: Opportunities are opening up for those who are willing to take some risk.

A Resilient Independent Spirit
Finally, there's Todd Linden, president and CEO of Grinnell Regional Medical Center, also in Iowa. Linden and his team have taken the more common approach for smaller hospitals of affiliating with larger organizations in order to achieve economies of scale, get access to executive talent that's unavailable to them as a standalone, and to achieve better contracting power with payers.

But it's found a way to do those things in a way Linden says doesn't break its spirit of independence and doesn't involve an asset merger. That kind of thinking requires creativity, and there's no one-size-fits-all solution, but it allows a smaller hospital to thrive while the world it's known begins to crumble.

Despite all the change in the air, even now, healthcare change is happening slowly. You still have time to figure out your place in the new ecosystem. But every journey starts with the first step. Maybe these three leaders can provide some inspiration that your choices aren't limited to selling out or slowly fading away.

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Philip Betbeze is the senior leadership editor at HealthLeaders.

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