A New Abundance Model for Hospitals

Sean Mccall
Managing Vice President, Houston Office

As states re-open, and backtrack on re-opening, leaders across organizations are seeking safe ways to serve customers, protect revenue, and save jobs. Scarcity mindsets rule as leaders problem solve from a perspective of lowered expectations, limitations and reduced resources. Healthcare is no different, but it is facing an unprecedented and compounded crisis. Leaders of healthcare organizations could gain more by adopting a new abundance model where operations become more cooperative and fluid, customer intimacy forges a new patient-hospital relationship and product leadership fortifies differentiation from new market entrants to enhance revenue capture.

A compounded crisis looms…

The Center for Infectious Disease Research and Policy projects an 18- to 24-month duration for the pandemic, with highly uncertain shapes for rate of infection curves.

Human behavior influences the course of a pandemic and changes to economic, social, technological, environmental and legal factors increase volatility and complexity, and directly impact the organization’s ability to navigate the crisis. Compounding, hospitals and health systems have suffered over $200B in lost revenue due to COVID-19 in only four months, as estimated by the American Hospital Association. The financial future of hospitals and health systems are at risk, as BCG estimates almost two-thirds of all health systems face material financial risk, while one-third of Americans are postponing or canceling elective procedures, per Modern Healthcare.

There is opportunity to take adaptive action before the seasonal flu for hospitals and health systems – but only in a small window. This creates a critical juncture right now to address hospital financial viability given changing demand and patient fears in a volatile situation.

Patient fears and shifting demand

Like all organizations seeking safe ways to serve customers, healthcare organizations are proactively addressing patient safety and healthcare worker safety. Yet, patients fear entering the hospital for the increased risk of getting infected, including fear of touching things, fear of being touched, and fear of waiting longer than they must and breathing more hospital air. These fears, along with Safe-At-Home (SAH) orders, are drastically changing the shape of demand for non-emergency healthcare services, particularly inpatient care and elective procedures.

A recent BCG survey uncovered 80% of patients who postponed elective treatment expect to reschedule within six months, with only 40% likely to reschedule in the next three months, substantially challenging the financial future of hospitals and health systems as 75% of providers have only 60 days of cash on hand. BCG also found patients who need procedures requiring inpatient care have the least confidence in rescheduling, at only 60%, and 25% of patients indicated they would feel more comfortable rescheduling care from a hospital to a clinic or ambulatory center when available. The dead-on-arrival rate is up by 81% in a New Jersey town and up 40% in San Francisco, suggesting patients are even delaying treatment for emergency situations.

These trends are concerning as demand for profitable elective services is disrupted by the pandemic, and utilization fluctuates wildly following government mandates for bed capacity. Providers have a need to regain patients quickly and effectively, but traditionally hospital systems are built to optimize scarce resources that have been created by regulatory bodies and cultures of specialization and compartmentalization.

An abundance model

Hospitals must pivot to an abundance model to mitigate risk of severe financial losses and jobs during the extended COVID-19 pandemic, focusing on near-term tactics and introducing longer-term strategic moves now to both protect revenue and ensure patient safety.

“Historically, pandemics have forced humans to break with the past and imagine their world anew. This one is no different. It is a portal, a gateway between one world and the next.” – Arundhati Roy, Booker Prize Author, The Pandemic as a Portal

Through a new abundance model, operations become more cooperative and fluid through creating adaptive facilities, flexible business architecture, leveraged personnel, and integrated service lines. Customer intimacy forges a new patient-hospital relationship, shifting control and responsibility towards the patient, creating deeper levels of trust and partnership by addressing patient unmet needs. Product leadership fortifies differentiation from new market entrants by shifting point of care outside the hospital walls, with the massive upside of access to hospital expertise and seamless hospital-home products to enhance revenue capture.

This shift requires a comprehensive approach and courage to explore constraints that may have seemed fixed in the before COVID-19 world. Healthcare administrators, physicians, and surgeons can choose to see the compounded crisis as an inflection point and an opportunity for transformation and change. This new abundance model delivers a systematic approach through a new value discipline framework, with new perspectives on the patient safety journey and point of care.

To learn more about how to make this change and the mindset needed, contact Sean McCall at sean.mccall@parivedasolutions.com.

 

This Pariveda Perspective was published in a collaborative effort with Sean McCall and his colleagues: Jeff DyKevin Moormann, Margaret Rogers and Alex Tai.

Sean Mccall

About the Author

Sean McCall Managing Vice President, Houston Office
Mr. Sean McCall brings a wealth of professional services, business intelligence and custom software experience to our Management Team. He is a highly-motivated and forward-thinking professional services leader, with a team sports background, who can inspire groups to greatness.

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