I wrote this in response to some comments I received on my piece in HospitalImpact.org.

I do not advocate assembly line medicine, especially at a hospital. I go out of my way to stay out of the healthcare business–the clinical side of healthcare–an area in which I have no background other than having been a patient.  There seems to be an inability to answer basic business questions relating to how the business of healthcare is run.

On the care side there is a need for the independence and the je ne sais quoi nature of care. However, the business of healthcare and the healthcare business can coexist in a more business-like manner. There are hospitals which get it right, and those which get it much less right.

Some of the ineffectiveness of running a hospital like a business has to do with costs, some with waste–wasted time, wasted opportunity, some with inefficiency, and some with poor planning. If one hospital can do procedure X for thirty percent less than another, it is worth exploring what accounts for the delta. If another hospital can perform twenty percent more procedures with the same level of resources, that is worth investigating. There is no point keeping metrics unless one is willing to improve them.

I am not big on efficiency. In most cases, efficiency implies speed. It is possible to perform poor processes at a speed which will make your head spin. Lots of hospitals are toying with Lean. Lean works best with a valid set of processes. Without a valid set of processes–best processes–there are not enough Sigmas to justify the expense.  To those lauding how many Six-Sigma professionals they have employed, what have they done for you?  Are you better off than those hospitals who only have Five-Sigma specialists?  Would you be better served if you cranked it up a notch or two to Seven or Eight-Sigma gurus?

Then there are the cost cutting advocates. Cost cutting alone is a dead end strategy.  Every manager can cut costs–less than one in a hundred can increase revenues. What do you do when there are no more costs to cut? Are you more effective, or net-net did you simply replace the brewed coffee with Folgers? Want to cut costs? Lock the doors. But that does not solve anything.

If none of these questions can be answered today, what happens in five years? New entrants will have gobbled up many profitable services and will be able to do so because they do not have “Big Box” overhead. Reform will have forced another business model on large providers. Payors and pharma will continue to battle for their share of each healthcare dollar.

I think hospitals can grab an even larger portion of that dollar, but I do not think they can do it without changing how they approach the business of healthcare.