Healthcare’s pre-mortem

I call this my premortem of the large provider business model.  The new reform law is Washington’s Anschluss of the healthcare business model—the annexation of the old way of doing business.  With change, as with writing a novel, the most difficult part is to invent the end.  It is only difficult if someone actually gets to that part, the end.  Many large providers remain mired in the first chapter.

The term Ultima Thule refers to any distant place located beyond the “borders of the known world.”  That is where we are when it comes to trying to understand the implications in the realm of the known and unknown external influences on the business model of the large healthcare provider.  I tend to have a stygian mindset about how I think these influences will play out—when Washington sneezes, it is the providers who catch the cold.

Sometimes it is a matter of asking the right questions.  Unfortunately, when one asks questions, somebody always has answers.  The bad thing about answers is they often bring closure to the process of thinking.  In the short-term there may be a modus Vivendi between us—an agreement to agree to disagree, but in the long-term limiting one’s vision to the borders of the known world will prove fatal.

Gone are healthcare’s Elysian moments when leaders thought they could keep doing what they were doing as long as they did it a little better.  At some point, there are no more costs to cut.  Providers will not be able to get any Leaner.  The time has come to square the circle—something proven impossible in 1882 by Ferdinand Lindemann.  Squaring the circle is an attempt to construct a square with the same area of a given circle using Euclidian geometry.

Trying to retrofit today’s healthcare model to meet tomorrow’s business requirements seems to me to be a similar argument.  It can’t be done; you can’t get there from here.  That it cannot be done won’t stop people from trying.  The impossibility cannot be proven.  The proof will be apparent only when hospitals start to fail.  Only then will it be possible to “walk back the cat” to diagnostically deconstruct what failed hospitals should have done.

A purpose of intelligence is the ability to assess and predict.  The application of thinking and intelligence is the ability to assign relative importance to predictions.  Here’s my assessment and prediction.

To successfully change the large provider model one must disrupt it, not simply adjust it.  It has nothing to do with asking, “How can we do this better?” disruption requires that we ask, “Do we need to do this?”

For example, last week I met with the former CFO of a group of east-coast hospitals.  Each hospital had an orthopedic department.  The group also owned an orthopedic clinic.  The clinic was ranked among the top twenty orthopedic centers in the US.  None of the hospitals’ orthopedic departments was ranked in the top one hundred.  The CFO recommended the hospitals close their orthopedic departments and service those patients at the clinic.  This would improve quality and eliminate duplicative costs.  Great idea.  Unfortunately the board liked their hospitals to be able to offer all things to all people—quality and cost be damned.

Why?

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