Healthcare 2014: Embracing the New Normal

“So what do we do? Anything. Something. So long as we just don’t sit there. If we screw it up, start over. Try something else. If we wait until we’ve satisfied all the uncertainties, it may be too late.” – Lee Iacocca

In our conversations with stakeholders – physicians, hospital and health system administrators, health plan executives, board members, and government officials – there is one constant theme: change and uncertainty are the new normal. Strategies and tactics that worked brilliantly in the past are failing. Compensation and governance structures that have served us well are obsolete and prevent us from implementing badly needed reforms.

There are many sources for this uncertainty including ongoing implementation of the Affordable Care Act (ACA), political gridlock, a weakened economy, shifting demographics, and rapid technological advancements (e.g., electronic health records, telemedicine, big data predictive analytics).

Healthcare leaders’ reactions are varied:

  • Head in the sand – ignore changes and uncertainty and carry on as usual
  • Deer in the headlights – intellectually recognize the need for change, but remain paralyzed for fear of making the wrong decision
  • Exit strategy – retire or sell one’s organization
  • Reality check – co-create solutions and continue to make midcourse corrections based on measurable real-world results

In working with hundreds of healthcare organizations and carefully studying market trends, we have identified five fundamentals driving the transformation of our healthcare payment and delivery system:

  • The industry is learning to purchase value, not volume.
  • Providers and payers are struggling to find common solutions to universal challenges because healthcare continues to be a local and regional commodity.
  • Stakeholders are searching for their purpose and relevancy in a patient-centered healthcare continuum.
  • Consumerism is emerging as a driving force in healthcare.
  • Change is accelerating due to knowledge derived from disparate and dynamic data.

To lead and succeed in such an environment, one must embrace creative, adaptable strategies. We see success with our clients that have adopted Lee Iacocca’s philosophy: first, experiment with pilot projects that make sense given our current understanding of the market; second, objectively monitor results in real time with a willingness to admit failure quickly and inexpensively; third, make midcourse corrections when results conflict with intended outcomes; and fourth, fully engage players from all levels of the organization in all stages of the project.

Taking that critical first step – embracing experimentation – requires one to understand how the five fundamental drivers, each in their own way, are transforming healthcare as we now know it. Then, by visualizing your organization’s future role, you can set and correct your course for constructive change.

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