Funnel Vision: Do Health Leaders Have Delivery-Model Myopia?
As most anyone who has ever taken a marketing class knows, one of the two grand gurus of the marketing discipline, Theodore Leavitt (the other one being Phillip Kotler), coined the famous phrase, "marketing myopia," to describe industries or firms that define their business too narrowly. Leavitt's seminal article originally appeared in the Harvard Business Review, and his then-reference point, which provides a sense of just how long ago the article was written, was the railroad industry. Leavitt maintained that railroads atrophied financially and strategically because they viewed themselves in the railroad business and not the transportation business.
According to Leavitt, businesses that stay viable and remain successful over the long run are those that continually broaden their vision, expand their scope of operation and influence, and, perhaps most significantly, focus on meeting consumer needs, and not on merely selling or delivering their products or services.
Following that logic and reasoning, given the nature of today's shifting healthcare landscape, one might ask, if healthcare leaders have defined their operating model too narrowly. Even more to the point, have we provincially focused our sights (and our capital) on a strategic emphasis—arguably a real estate emphasis—that is, in essence, yesterday's model?
In short, do we suffer from delivery-model myopia?
Given the planning focus and capital investment in so many systems and numerous markets throughout the country that overly emphasize expanding and/or enhancing the existing campus, one might be hard pressed not to believe otherwise.
Where have all the patients gone?
One study that brings this relevant yet arguably disconcerting trend to light is a recent report by the Advisory Board Company, Value at the Center. As the authors of this report point out, there has been an unrelentingly steady decline in the growth of inpatients that are admitted at the nation's hospitals over the past few years to where aggregate year-over-year growth has almost flat-lined.
So, where have all the patients gone?
Not surprisingly, many have migrated to more convenient and less costly alternatives, such as ambulatory surgery centers, outpatient imaging centers, and, retail healthcare settings such as convenient care clinics. The Advisory Board captures this troubling trend with the well-articulated, yet somewhat daunting question, "Are we on a glide-path to history?"
A good question, indeed, and one that the data seems to support. Nonetheless, these statistics seem to be counterintuitive, or at the very least, counter-conventional wisdom. After all, aren't these years—with baby boomers aging almost as rapidly as oil prices are rising—supposed to be the times of increased inpatient volumes, heightened hospital utilization, and more-than-ample patients crowding the hospitals throughout the nation, as the many avenues for patient referral funnel to the main campus?
Tell it to the data.
The reality is that the patients probably are there. They're just not flocking (or funneling) to the medical center campuses as was once expected and projected. The age of consumerism has ushered in other market phenomenon, like same-day convenience, focused delivery models and venues, and a rising tide of new competitors who do not have the same historical mind-set and delivery-model intransigence that might hamstring those of us who have been in this field almost long enough to remember when Leavitt first wrote about the railroads.
Show me the money: The capital of healthcare
If this doesn't sound like something that is all that applicable, consider this metric. Perhaps the best gauge of an organization's focus is the amount of capital it allocates and spends on its strategic initiatives. To observe the amount of capital now flowing into existing medical facilities or count the number of gargantuan building cranes that dot the major hospital campuses across the nation, one would think that the action is still with the hub of the healthcare wheel—the traditional medical campus. Yet the revenue streams, which could aptly be termed rivers in some markets, seem to be flowing away from the hospital setting. In reality, as many observers and strategists have noted for a few years, there has been a steady migration away from the main campus.
Although many of us have known this—either intuitively or by monitoring patient volumes at our facilities—recent information corroborates this migration trend toward the emerging venues that now dot the healthcare landscape across the nation.
All this before true consumerism
What is most interesting about this significant shift in healthcare volume and increasing migration away from the established delivery model is the fact that it is so pronounced prior to a significant (and substantive) embrace of what we might term "true consumerism." As some postulate, under a heightened consumerism framework, the patient will have more economic involvement and therefore increased decision-making responsibility. A few of the industry strategists who monitor such trends see this as a natural outgrowth of the current winds of change in the field; particularly given recent bills in Congress—such as the Wyden/Bennett Healthy Americans Act—which in essence combine a universal coverage stipulation within a market-based framework. This type of overarching healthcare reform model allows the consumer/patient greater access and provides more individual financial accountability.