Health Markets Guru

Tom Peters Excellence Applied to Healthcare Reform and Hospital Strategy

Tom Peters, in a May, 2008 HFMA interview with the organization’s CEO, Richard L. Clarke, opens the door for a future of healthcare excellence using the key of simplicity.

Leveraging his background as one of the foremost authors on the application of leadership principles to stagnant industries, Peters calls for “a revolution of simplicity that gets us focused back on delivering health care and realizing that a lot of our operational problems …can be fixed with some straightforward solutions.”

Among the solutions floated by Peters, patient safety and quality rise to the top. He envisions incentives that promote family practice rather than the currently dominant super-surgeons, with telemedicine and technology keeping the aging Baby Boomer population out of the hospital.

Peters calls the medical error rate of 100,000-200,000 annual deaths “a disgrace”, but rather than pitching a simple-yet-global approach that would largely mitigate these numbers, he instead asks financial leaders of all health systems and hospitals to shift their roles to studying and experimenting with small solutions to the issues.

He implores these leaders to ask “What am I going to do in my hospital to make the world a better place?”

Clarke asks how they are to do this while mired in a broken payment system. Peters tells him to get over it, that the payment system will continue to frustrate, and that by focusing their time on making the hospital better, real progress can be made in the form of small experiments to improve quality of care.

Peters suggests micro experiments so that an organization can latch onto initiatives that are proven to work first at a local level, and abandon those efforts that didn’t make the cut. Financial experts need to become experts in the 5 or 6 issues most impacting quality delivery and patient-centric care at their hospitals.

To Peters, there is an enormous opportunity to build leadership right within the ranks of CFO’s throughout the health system, something generally regarded as missing in healthcare reform. This responds to Clarke’s demands for ROI associated with quality initiatives. Peters suggests that while there are lots of examples how improvements in quality resulted in short-term, lower bottom line results – flaws in the fundamental incentive schemes – making quality and patient safety/success part of the long term vision of every healthcare organization places the accountability of healthcare reform squarely on the shoulders of every ambassador of efficiency.

He shares two examples of health organizations that have made sustainable commitments to patient safety and quality with dynamic monetary success:

Griffin Hospital, which now commands dominant market share; the Veterans Administration hospitals which has invested small sums into quality improvement experiments.

What are your views about Tom Peters’ Revolution in Simplicity for Healthcare Reform? Do you believe he hits the mark for how true leadership among the financial stewards will reward health systems with a more sustainable future of better health delivery and profits, or is there something missing in Peters’ argument? How would you suggest health systems surmount their individual ambitions while taking care of America’s need to fix a broken system, plagued with death and errors?

------Michael

Market Anthropologists Discover Emotions That Drive Behavior

I'm aghast! It's amazing how many people believe they can affectuate mass change of behavior simply by appealing to customer's sense of logic. "If I can get in front of them and reason with them, I'm sure to change their behavior for the better, permanently." Have you met people like this?

Having created and implemented large leadership training academies for healthcare companies, I am keenly aware of the need to ensure knowledge and leadership skills are transferred throughout the organization. I am also well-versed in the trials and errors of such endeavors, largely because skills and role-modeling are taught to the head, with the hope that reasoning will transfer to the physical engagement we so often find elusive: ideal customer behavior (both internal and external customers).

Behavioral change is something that is studied by the finest anthropologists to decipher the elements of lasting change. In the retail environment, teams of people trained by Paco Underhill can assess how store traffic and customer interaction with products and promotions, translate to sales volume, satisfaction, and presumably the holy grail of business: customer loyalty.

Anthropologists seek to study how people behave in order to understand society. The study of psychographics is the crucible of how people decide to purchase and use products and services. When one thinks about the implications of these kinds of findings, it becomes clear that healthcare at-large could benefit tremendously. How much guess work would be eliminated in planning efforts if hospitals, care centers, and clinics and labs embarked on their own studies of people and their respective, collective interactions within and without their facilities? How more effective and appreciated would health insurance companies be if they actually sought to understand their customers, both employer groups and the individuals and families who make use of the insurance plans?

Do you agree that consumerism in healthcare now demands that providers, payers and other industry players seek to understand customer behaviors? What are your experiences in how healthcare people think about you, the consumer? How would product and service offerings change or adapt to new understandings about the customer? Is there a place in healthcare for customers to drive the growth of the industry?

------Michael

Hospital Business Development More Than Just Determining CON Status

I have been reading other blogs about how increasing competitive healthcare offerings at hospital sites can be best decided by looking at their CON status --- that is, the Certificate Of Need in which each state determines the maximum absorption of health facility square footage for a neighborhood. With respect to the author of Hospital Business Development blog, this is a limited approach to competitive positioning and serving your ultimate customer. Moreover, many states are becoming non-CON, leading hospital growth to its own risk.

Most people in healthcare would agree that hospitals are in the business of healthcare. As such, it's important to remember that competitive advantages come in all shapes and sizes, and are derived as the position that your customers see you occupying. Instead of determining the maximum square footage that the surrounding rooftops can absorb, why not look instead at who lives and works underneath those rooftops?

This is the study of customer research and segmentation. By analyzing the needs of customers, we begin to appreciate the experiences availed to them by current market offerings. By speaking to customers of varying types, we learn their needs and desires for how they want to be treated and served. And by examining how they live and work, how they play and interact with each other, and how and why they buy the products and services they seek, we begin to discover what makes them tick... and if we're truly fortunate, we begin to glean from them approaches to differentiate our service offerings in ways that are far more meaningful to them. This is true, whether we are speaking about a dry cleaners or a bank or a hotel or consulting firm or a hospital.

Indeed, there are many reasons why speculating about neighborhood growth and its impact on the facility growth of health systems is a relatively limited approach to planning for hospital systems. You never know whether the same neighborhood will expand or contract over the long haul. You are never quite certain how the competitive offerings will attract your customers to your competitors. And you certainly are in the dark about whether the product and service offerings you provide are acceptable to your current customers.

Moreover, consider the moving target of procedures once the sole domain of hospitals now shifting into lower cost outpatient centers such as medical office buildings and labs. Building to footprint size limits your view of how healthcare at the hospital setting serves and impacts your ultimate customer.

Once customers are able to share vital information and your segmentation profiles are complete, real strategic planning can enable hospitals to grow through a review of service lines and how they serve customers from a holistic standpoint. Does the hospital offer birthing services? If a primary customer is new families, the hospital might benefit from a pediatric center, including satellite offices with family doctors who have a primary relationship with the hospital. Service line growth considers the customers you have and want and determines the service line mix you can be most competitive having, as well as the time and resources needed to achieve this market position.

In past blogs I've shared several methodologies for evaluating market position and customer segmentation. Next I'll be focusing on illuminating the cutting edge of strategic market growth for hospitals, and how the best systems are incorporating a culture of change to surmount today's real world healthcare delivery challenges.

What are your thoughts about hospital facility planning processes? Have you found the old approach to determining absorption -- the one used mostly by commercial real estate brokers -- to be limited in helping determine your planning? How does your hospital system seek to understand your customers and the prospective customers you'd most like to attract? How do you then leverage this information?

Let's share some thoughts.