90. Hospitals have provided amazing service for the last 100 years, but location is becoming less important for healthcare. Care can happen almost anywhere at lower cost. What conditions hospitals treat, and how hospitals serve their communities will dramatically change over the coming decades.
Quietly, patients have grown in power, asserting their ability to consume care conveniently, on their own terms, in locations that didn’t exist even a decade ago. This paradigmatic shift is redefining where care is administered, as well as how caregivers are compensated for it. Our healthcare organizations must change course to meet them, as well as share information to make it possible.
Hospitals have provided amazing service for the last 100 years, but because they constitute so much of our health care economy already, they are unlikely change agents. The theory of disruptive innovation, termed by Harvard Business School professor Clay Christensen, tells us that it is normally a new entrant to the market, not an established player, to remake the status quo.
Retail pharmacies, urgent care clinics, telehealth, and mobile health startups are stepping in to radically reinvent the way patients consume care. CVS and Walgreens have evolved beyond pharmacies and convenient places to pick up laundry detergent into veritable clinics. Urgent care clinics have supplanted many emergency departments for pressing, non-acute care. Patients in remote locations use telehealth apps to receive care remotely. Location is becoming far more flexible—and far more of a competitive advantage--as alternative players bring services to patients’ home, or to a place right down the road. These patterns are diverting patient traffic and loyalty from more traditional care settings, giving new entrants a quiet power to compete and win patients’ business.
Patients are motivated by more than just access and convenience, however. Average quality at very high cost is becoming unsustainable. With the rise of high deductible plans, patients are incented to shop for high-quality, low-cost care. Many of our largest and most prestigious hospitals fail to provide true value according to this score. This is why some employers are contracting with ‘focus factories’ that perform specific procedures at unmatched quality-to-cost ratios, as Lowes has done with the Cleveland Clinic for employees needing heart surgery. Some forward-looking health systems are partnering with alternative care players to extend their own offerings. Consider Kaiser Permanente, one of our nation’s largest health systems, which recently began staffing Target clinics to capture and coordinate care for its patients.
Business incentives are a classic motivator, powerful enough to move even the largest and most entrenched players. Smart hospitals will look outside themselves to ensure their care and services deliver high quality at a fair price, in convenient settings that appeal to consumers. They will offer excellent product management, convenience, and elegance. This will require collaboration and even ‘coopetition’—cooperation with competitors. Those health systems that put the customer first, always—even when that means bowing to a competitor—will still succeed in becoming part of the value chain. Partnering with the best of the new market players will enrich their own offerings and keep them off of the sidelines.
As care moves away from the hospital, information must move with it. Those systems that freely share clinical and cost information will have a huge strategic advantage over others to coordinate care, both to satisfy and retain consumers and get reimbursed under new payment models. Interoperability is quickening apace, making it possible to share information from encounters at the periphery of the healthcare universe back to the primary care physician—the center of the patient’s universe, his lodestar—and to the specialists in orbit around him. Healthcare is confidently moving towards a day when providers can exchange data with their referring or specialist practice, with labs, and with the new retail clinics, telehealth providers, and urgent care clinics along the continuum.
The way in which hospitals serve their patients will dramatically change over the coming decades. They will not be the center of care for many of whom they serve but an important spoke on a much more robust wheel of alternative care settings and services. Healthcare will stop buying and building giant software stacks that keep the health system at the center of the universe. Where there used to be data centers will be plug-ins and interfaces, with open networks that not only allow information to flow as patients receive care across a variety of settings, but allow innovators to create new services altogether. Soon, there will be no limit to where patients receive care. The hospitals and innovators who survive will be the ones brave enough to meet them there.