In Healthcare Business Strategy, One Size Doesn't Fit All
The innovators have a story to share, but the watching and waiting perspective is also valuable, and probably is more in line with the majority of our readership. It's our job to reflect the diverse opinions of our audience-—whether or not we agree that their strategic approaches are the right choice.
Of course, my friend is right about the operating margin. Less than 2% over the long term is not likely to ensure the long-term stability of an organization. But let's say I eliminated speaking and reporting on hospital executives who achieved less than a 2% annual margin.
That would preclude me from talking to the CEO of Fairview Health in Minneapolis, Mark Eustis. At the recent American College of Healthcare Executives Congress, Eustis shared that Fairview recorded a margin of just around 1% for 2011. Certainly long term, a 1% margin isn't going to cut it, and Eustis knows that. He's taking risk though.
Fairview is embracing many of the most talked about aspects of healthcare reform, from joining the CMS's Pioneer ACO program to signing long-term risk-based contracts with commercial insurers. Essentially, Eustis is cannibalizing some of his system's potential fee-for-service revenue to be well-positioned for the future. But that doesn't necessarily mean he'll be right.
We're available to talk with any hospital, health system, physician practice, or health plan executive who is trying to address the very real issues we have in this country, whether we agree with their approach or not.
Debate about these potential improvements is crucial. It's the only way we'll make progress. Our job is to show you the depth and breadth of the choices available, with a dollop of perspective. It's your job to decide which approach is best.
Philip Betbeze is senior leadership editor with HealthLeaders Media.
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