We’re losing money, but making it up in volume.

I wrote this in response to an article in modernhealthcare.com titled New doc payment system needed
I posted this question on a dozen healthcare Linked in groups; How Can Doctors and Hospitals Make Money in a Post-Reform, Health 2.0 World?  The reason for the question was to probe for ideas for a speech I am giving in May at ICSI.
My takeaway of the responses is that every approach seems to be triage.  I see the business of healthcare, as juxtaposed to the healthcare business (the clinical side) as a 0.2 business model.  Plus or minus variants of IT, the business continues to run in much the same manner it has for the last fifty years.

Analyzing the model, it appears appears to me to be similar to the pattern created by dropping a pebble into a pond–ever expanding circles, but circles none-the-less.  Sort of a fractal business model, each fractal differing only by size.

The business of healthcare could not be facing more fundamental changes–most of which are external, most of which are unknown.  This is especially troubling for an industry whose P&Ls more closely resemble those of GM than of Apple.
It is time to stop relying on the adages, “We don’t know where we are going but we are making really good time,” and, “We’re losing money but we are making it up in volume.”
Rule number one for change–executives must admit they have a busted business model.  Rule number two–executives cannot change Rule number one.”
saint Paul M. Roemer
Chief Imaginist, Healthcare IT Strategy

1475 Luna Drive, Downingtown, PA 19335
+1 (484) 885-6942
paulroemer@healthcareitstrategy.com

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2 thoughts on “We’re losing money, but making it up in volume.

  1. Intriguing post, Paul. As a purchaser of my family’s health care and an interested industry observer, I know two things: we cannot continue to be passive as health care costs rise, and no one is exhibiting either the market power or the courage to change their current business models in a win-win way. I keep hearing talk about incentivizing prevention. Is that really the cure-all for improving the financial side of health care?

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    • Don, thanks for reading and commenting.

      I can’t find anyone on the edge. Ideas of change seem to be limited to an outward focus, trying to change things which they cannot control. What internal change there is seems to be limited to making slight corrections to a hundred year old model, almost like a skipper making a series of tacking maneuvers to try and get the ship back on course. Instead of saying what can we do, someone needs to say, where do we want to be, and then figure out how to get there.

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