Why Healthcare Needs Business Leaders
Last Updated July 27, 2020
The healthcare industry is big business. How big? As of 2016, U.S. healthcare spending reached $3.3 trillion, or $10,348 per person, and those numbers are only predicted to grow, according to the 2018 National Health Expenditure Report from the Office of the Actuary at the Centers for Medicare & Medicaid Services (CMS).
This large economic footprint of healthcare, coupled with the ballooning costs to employers, individuals and taxpayers, has grabbed the attention of those in some of the biggest and most influential companies in the world.
“Reducing healthcare’s burden on the economy while improving outcomes for employees and their families [is] worth the effort,” says Jeff Bezos, Amazon founder, and CEO.
Bezos, along with Jamie Dimon, Chairman, and CEO of JPMorgan Chase, and Warren Buffett, Chairman, and CEO of Berkshire Hathaway, have banded together to bring their big business approach to healthcare with the goal of lowering costs for their employees (and their companies) by launching their own healthcare company. But can an Amazon approach to healthcare really work?
Healthcare is unlike any other business. “Healthcare is not based on traditional supply and demand; it can’t run like it’s a ‘product’ to stock and sells,” says Dr. Michael Rip, Program Director of the Master of Science in Healthcare Management at Michigan State University. “It’s not that kind of business model.”
Healthcare needs leaders with the savvy to guide an industry in the midst of disruption—from shifting government regulation and technological innovations to business competition and patients demanding better care for less. These leaders also need to understand the unique requirements of the industry and the gravity of healthcare’s role in daily life.
Consumer Wants, Patient Needs
In the current patient-provider dichotomy of healthcare, the “consumer wants” and “company product” have a disconnect. Consumers want to be healthy, but they don’t necessarily want the “product” that is healthcare. After all, who really “wants” doctor’s visits, prescription medications, surgery, and imaging tests? Those services have historically been the “products” to help people get (or at least maintain) the health they want—and it’s a product that’s expensive.
Healthcare needs business-minded leaders who will flip the business model to the customer, giving consumers the healthcare they want by focusing on customer satisfaction rather than the healthcare product.
“Patient satisfaction for hospitals is considered one of the highest metrics they measure,” says Rip. “That’s why when you walk into a modern hospital, sometimes it’s difficult to know whether you are in a hotel or a hospital. Many hospitals are designed to in fact mimic hotels.”
Similarly, nursing homes and senior living facilities are becoming just that—places where people live comfortably, with many designed to resemble neighborhood communities.
This is driven by a customer mindset in which consumers expect a choice in their patient care. Successful doctors, hospitals and health systems need to shift their focus from delivering health services that patients only seek out when they are sick toward a broader range of approaches that deliver health and a gratifying patient experience.
The Convenience and Choice of Healthcare Tech
From advanced artificial intelligence, increased automation, payment apps, and mobile purchasing power, technological disruption is now the norm for organizations across virtually every sector, and healthcare is no different.
More and more doctors, healthcare facilities and insurance companies are embracing telehealth platforms, using mobile and video conferencing technology to provide on-demand medical care as an alternative to traditional office visits and in-patient hospital stays.
Healthcare tech is not only about patient convenience, but also about consumer choice and control. Consumers have readily embraced apps and tools that use health and lifestyle data to help them monitor and measure fitness and wellness (e.g., Fitbit). Consumers are looking for this same approach to encompass all healthcare—think a completely integrated platform with access to doctors, personal medical history and records, medication schedules, exercise therapy and personal wellness goals that empower patients to monitor their treatment and adjust their habits to improve their health outcomes.
Just as Amazon, JP Morgan, and Berkshire Hathaway are bringing their business approach to healthcare access for their employees, some of the biggest players in tech are leading the charge to rethink how medical researchers, physicians, healthcare facilities and patients connect. These include IBM Watson Health, Google’s Verily and Apple’s CareKit, with its focus on the patient-consumer: “Rather than relying solely on doctor visits, you’ll be able to regularly track your symptoms and medications, and even share the information with your care team for a bigger — and better — picture of your health.”
Healthcare needs leaders who will not only embrace the latest technological trends but spearhead their use within their organizations to ensure efficiency and cost-effectiveness. While tech companies can provide unlimited innovation, healthcare leaders need to balance that with pragmatism, ensuring the technology makes the practice of healthcare more efficient for physicians and more convenient for patients without increasing cost. Decreasing the costs of patient care is just as important to consumers as convenience or control.
The New Economics of Healthcare
The joint healthcare venture by Amazon, JP Morgan Chase, and Berkshire Hathaway is just one example of how the economics and business structures of healthcare are changing at a rapid pace. Insurance companies are acquiring or merging with healthcare providers—UnitedHealth’s recent acquisition of DaVita Medial Group and Aetna’s planned merger with CVS Health, for example. The Affordable Care Act (ACA) has changed the landscape for how physicians and healthcare facilities are paid and have even altered how they deliver patient care by incentivizing physicians, hospitals and other healthcare providers to coordinate care within Accountable Care Organizations under Medicare.
Healthcare organizations have to rethink their payment processes and how they’re deriving their profits. A recent study by the Mayo Clinic quantified this shift from “pay-for-service” to “pay-for-value.” Patients want high-quality care with great service and good health outcomes at a reasonable price. This consumer mindset coupled with the outcomes-driven incentive plan of the ACA is driving healthcare economics away from the volume or type of medical service to whether that service results in the desired patient health outcomes.
These economic shifts from volume to outcomes are having a domino effect on other aspects of the business of healthcare, from reevaluating healthcare supply chains for greater efficiency to meeting additional standards and regulations for healthcare compliance.
Healthcare Management Within a Business Framework
While the healthcare industry needs business-minded leaders grounded in the best practices of accounting, finance, economics, marketing, management and strategy for organizational success, it equally needs forward-thinking, agile healthcare experts to forge new paths for an industry in the midst of disruption.
A Master of Science in Healthcare Management can provide experienced healthcare professionals with the vital skill sets—critical thinking for decision-making and problem-solving; strategic thinking and innovation—and business acumen needed to excel and lead in this dynamic healthcare landscape.
