Expanding access to low-cost prescription drugs from overseas might look like a sure winner in the effort to make healthcare more affordable. President Obama supports the idea, as do many Democrats and several Republicans. But the seemingly popular proposal brought the Senate healthcare debate to a standstill Thursday, as Democrats divided over whether they should bow to the drug industry's fierce opposition. Majority Leader Harry Reid (D-NV) temporarily halted consideration of the healthcare bill after three days of inconclusive debate on an amendment by Sens. Byron L. Dorgan (D-ND) and John McCain (R-AZ). The provision would allow pharmacies and wholesalers to import drugs from countries with safety standards comparable to America's. Despite Obama's support for importation, the White House fears that if the amendment is approved, the drug industry will oppose the bill. Industry support is considered a key to passage. That is why the White House negotiated a controversial deal to limit the financial effect of the overhaul on the industry in exchange for its support.
House Speaker Nancy Pelosi endorsed a proposal Thursday that would allow people in late middle age to buy insurance through Medicare, helping to sustain an idea that sprang unexpectedly from the Senate this week. But the California Democrat reiterated that she would prefer to create government-sponsored coverage for Americans of all ages, and questions linger in the Senate about the politics and policy of expanding Medicare by allowing people ages 55 to 64 to buy into the federal insurance program for the elderly. The speaker stopped short of embracing the broader contours of a fragile compromise worked out by liberal and moderate Senate negotiators in an effort to nudge forward broad changes to the healthcare system. Still, she said: "There's certainly a great deal of appeal" to expanding Medicare.
Federal health officials said Thursday that almost 10,000 people have died of the swine flu since April, a significant jump from mortality numbers released last month. A month ago, the Centers for Disease Control and Prevention estimated that only about 4,000 had died. Officials also said that 50 million Americans, one sixth of the country, have caught the disease, and that 213,000 people have been sick enough to be hospitalized. Several flu experts said they were not shocked by the sudden jump because the new figures were as of Nov. 14, when this fall's wave of swine flu cases was reaching its peak.
St. Vincent's Hospital Manhattan announced it has laid off 180 of its 3,800 employees, blaming the recession and two years of healthcare cuts and taxes imposed by the state of New York. Michael Fagan, a spokesman for the hospital, said in an interview that those being laid off ranged from administrative workers to support workers in food service, housekeeping, and clerical jobs. He said some nurses—the only medical staff members laid off—were affected, but he could not say how many. St. Vincent's, with 366 beds, is a major presence in Greenwich Village and the latest among a handful of community hospitals in New York City and the surrounding area to lay off workers in recent months. The hospital came out of bankruptcy two years ago, and it continues to carry some debt, Fagan said.
A woman says she was ignored for so long at a Las Vegas hospital that she went home and gave birth to a premature baby that later died. Nevada State Board of Nursing administrator Debra Scott wouldn't provide specifics about the complaint stemming from 25-year-old Roshunda Abney's attempt to get treatment Nov. 30 at University Medical Center, the region's only public hospital. Witnesses who were in the waiting room have corroborated accounts by Abney and her fiance, Raffinee Dewberry. Hospital chief Kathy Silver has promised action against those responsible if the allegations are true.
For decades, periods of severe financial pressure and uncertainty have been fertile ground for the explosion of highly successful products, services, and companies. Apple, Fortune magazine, General Electric, Gillette, Hewlett-Packard, Kellogg's, Microsoft, Motorola, MTV, Revlon, Trader Joe's, and Disney are among the firms that began their road to competitive and financial success and brought innovative new services and products to the market in periods of extreme duress. Baystate Health, Geisinger Health System, Mayo Clinic, Advocate Health Care, Ohio Health, Henry Ford Health System, Celebration Health, Baptist Health Care, Baylor Health System, Kaiser Permanente, and Scripps Health are among a number of healthcare organizations currently achieving similar distinction under adverse market conditions. Designing revenue growth strategies that are bold in nature and accelerating the implementation of those strategies are fundamental to the success of healthcare organizations.
In recent years, many healthcare executives have pursued growth with an emphasis on building inpatient volume in existing high-margin services. Looking forward, given current and pending reductions in reimbursement and the expected impact of healthcare reform, revenue rather than volume will be the appropriate focus of growth initiatives. Further, achieving revenue growth in cardiovascular, orthopedic, neuroscience and other traditional surgical services by driving volume through existing models of care delivery will become increasingly difficult. Instead, more effective avenues will involve clinical innovation, resulting in new services and products (e.g., wireless medicine), lower cost locations, and models of care delivery. Similar to the companies and healthcare providers referenced above, an organization's future success will depend on setting bold strategies and accelerating implementation. Organizations simply cannot afford to "hunker down" and watch competitors leap past them.
At first glance it appears that "bold" is a relative concept and can be situational. Interviews with a sample of hospital executives across the nation in early 2009 revealed widely differing perceptions of what made their successful strategies bold. Several pointed to specific changes made to the features of services or products, while others focused on the degree of impact achieved once implemented. Some focused on collaboration with powerful strategic partners, while others noted the degree of risk taken.
After more careful scrutiny, it becomes evident that for a strategy to be bold it must simultaneously push boundaries on two dimensions: nature of change (innovation) and degree of change (impact). The extent of innovation takes into account the way in which the product or service provides new ways to meet customers' needs specific to access, information exchange, ease of use, clinical outcomes, and pricing, among other factors. The degree of impact takes into consideration the extent of change the product/service affects in terms of quality, efficiency, satisfaction, awareness, preference, market share, and profit. Each of these two dimensions can be viewed as a continuum extending from a "low" to a "high" level. Strategies on the high end of both dimensions would be bold "game changers" with a higher return on investment. Frequently, a degree of risk is inherent to bold strategies. Risk takes into account the extent to which a product or service is ahead of its time; the amount of investment and length of time to ROI; its divergence from established patterns and partners; the amount of collaboration with competitors; and the probability and cost of failure. A strategy does not need to have a high level of risk to be bold. Rather, for a bold strategy to be successful, it is critical that the risk be accurately characterized and managed. Figure 1 illustrates how a bold strategy fits within a three-dimensional landscape composed of these three characteristics (innovation, impact, and risk).
While many types of bold growth initiatives exist in healthcare, they can be grouped into four categories of strategies: 1) acquisitions/mergers; 2) physician-oriented; 3) patient and employer-oriented; and 4) technology-oriented. An example of an organization pursuing a bold acquisition/merger strategy is El Camino Hospital, a 300-bed community hospital in northern California. El Camino accelerated its entry into a target market by acquiring, closing, re-structuring, and re-opening Los Gatos Community Hospital, a competitor. Innovation was incorporated through changing the dynamics of patient access and physician integration. The hospitals are in the process of achieving significant impact in increasing residents' awareness of the organization and increasing patient volume and income. The initiative was managed within an environment that had a high degree of risk associated with four factors: the management team had no prior experience operating a multi-hospital system; the closure and reopening of the acquired entity had to be expedited to avoid significant loss of physicians, clinical staff, and patients; the market entered was highly competitive; and a large investment was required during a recession.
"We intentionally built a bold strategies category into our recent strategic plan," said Ann Fyfe, vice president of business development at El Camino Hospital. "The acquisition of a competitor in a target market is expected to dramatically enhance our collaboration and alignment with physicians in that area and significantly increase patient revenue at both the new and our main campuses. Similarly, we saw an opportunity to link clinical innovation in genomics to enhancement and growth of our existing oncology and cardiovascular services while substantially differentiating our organization."
El Camino Hospital's initiation of the nation's first community hospital-based genomic medicine institute is illustrative of the physician-oriented bold strategy category. Innovative elements of the strategy included the design of personalized patient therapies based on the genomic analysis and the formation of a strategic partnership with DNA Direct, a firm providing 20 board-certified genetic counselors with different specializations. Significant impact is being realized in three ways: resolving barriers to the use of genetic testing and thereby delivering significant new value to patients via personalized medicine; positioning the organization as a destination for "leading edge" care; and considerably shifting market share and patient volume. The strategy was managed in an environment that had a moderate to high degree of risk related to implementing a clinical service ahead of its time and leaping beyond the hospital's historical capabilities.
A Texas-based community hospital offers an example of the patient and employer-oriented category. It is pursuing accelerated entry to targeted markets on both sides of its current service area and simultaneously creating barriers to competitor entry in those regions by establishing a joint venture with a large retailer that would incorporate health clinics in its stores in both markets. A moderate level of innovation will be incorporated specific to patient access and care coordination through the use of electronic medical records and other tactics. The strategy is anticipated to have a high level of impact specific to creating awareness, preference, and use of the hospital by two large new pools of patients. The strategy was managed within an environment that has a high level of risk considering that the hospital had no prior experience with retail healthcare and the return on investment is deferred.
To be bold, a technology-oriented strategy must create a fundamental change to one or more of the following: the location, process, outcome, and/or cost of clinical care. Such strategies typically involve disruptive innovation rather than an iterative evolution. For example, the adoption of a 128 slice CT scanner would constitute an incremental evolution. In contrast, implementation of a handheld MRI device would be disruptive and bold. Technology-oriented bold strategies are demonstrated by companies that are achieving innovation in diagnostic and therapeutic clinical equipment as well as those developing wireless healthcare products. This includes using smart phones and wearable, ingestible, and implantable monitors and medication delivery products. A few examples among the many exciting concepts are physiologic function monitoring, cardiac function monitoring, mobile medication reminders, and wireless band-aid based sensing and communicating devices.
A close review of the organizations briefly described above and others reveals that there are 10 critical success factors for the pursuit of bold growth strategies. Those CSFs are summarized here:
Create/reinforce a culture that emphasizes openness to change, taking control of transforming the organization, as well as accepting and learning from failure. Avoid "hunkering down."
Allow flexibility to reallocate capital and operating funds mid-year to capitalize on new qualified opportunities that are suddenly identified.
Identify the implications of the convergence of trends within and beyond healthcare.
Change and integrate the organization's structure, process, people, resources, and rewards as needed to streamline and accelerate analysis and decision-making related to bold strategies and their implementation.
Strong, proactive, and visible support by the CEO.
Designate a "champion" for the growth initiative. Free-up 30 to 100% of his or her time to devote to that initiative, and allow for changes in processes so he/she can expedite analysis, decision-making, and implementation.
Once a decision is made, all parties must be fully "on board" and committed 24/7 to success. There are no allowances for second guessing or foot-dragging.
Where possible, leverage existing resources (e.g., minimize time to market and investment) and/or utilized strategic partnerships (e.g., expertise, brand identity, funding)
Be creative in considering a broad array of sources for and creative approaches to accessing capital
Establish and reinforce accountability
To enhance an organization's future success, its leaders should not wait for change but instead "drive" it with bold revenue growth strategies. The identification of opportunities for those strategies is simply the initial step. A second critical component is to accelerate the decision-making and implementation of those strategies.
Mark Dubow, MSPH, MBA, is a senior vice president of The Camden Group in its Los Angeles office. He may be reached at MDubow@TheCamdenGroup.comor (310) 320-3990.For information on how you can contribute to HealthLeaders Media online, please read our Editorial Guidelines.