What Lessons Can The Healthcare Industry Learn From One of the Most Despised Industries
The healthcare industry is at a crossroads and hospital leaders face a big choice. The question is whether they heed lessons from the mistakes of another industry.
Among America’s “most hated industries,” cable TV providers top many lists. Its status is not surprising; given ever-increasing costs, death by a million fees, long bills with indecipherable charges, hundreds of channels you don’t need in order to get to the few you want, and slow customer service. Consumer frustration grew so loud, the government stepped in and passed the Television Viewer Protection Act of 2019.
What can healthcare leaders learn from the cable industry? Consider the parallels.
Cable companies are pretty much local monopolies. In many ways, so are hospital systems. Their playbooks look eerily similar. Both industries also have high (and rising) list prices, an opaque set of discounts for certain customers, and consultants coming up with more ways to game “revenue cycle management.” They’ve both adopted the strategy of bundling multiple services to lock customers in and focused more on consolidation than evolution when competitive disruptors began emerging.
The result? The “cord cutter” movement has become a thing. YouTube, Apple, Netflix, and more are redefining the industry and threatening the cable companies’ monopoly. Yes, the forward-thinking cable guys own some of the streaming services themselves, and they own the internet line into your home that streams your entertainment. Soon, they’ll have to deal with 5G that could let consumers go around the hardline to the house.
The choice hospitals have is the same as what cable companies faced: Act like a monopoly and raise prices and fees on whomever remains a customer; or act like a service provider and evolve (business model, technology, payment structures, and more) to carve out an important niche in an ecosystem designed to give the customer the value he or she expects and deserves.
Hospitals in America are full of good people stuck in a terrible system. Hospitals should tip the scales toward self-disruption because their monopolies won’t last. If they don’t, as the debate over healthcare intensifies, and the costs become ever-more unsustainable, hospitals may top some future “most hated” list.
Preventing the “Cord Cutting” Effect for Hospitals
Value-based primary care providers are substantially cutting overall demand for hospitals by 25-50 percent. Specialized providers of various therapies, home health, and more are reducing both admission and re-admission risk. Technology is enabling more outpatient procedures, remote care, and even a “hospital at home.” It is also bringing more convenient, customer-friendly solutions for urgent/emergent care. With these alternatives, the world won’t need as much hospital care, but when it does, it won’t have to rely on just the one in town.
When the front door of healthcare gets redefined from the local hospital to the primary care doctor, the balance of power will shift. We can then deliver patients something that is more affordable, similar or higher quality, and more satisfying. Hospitals won’t have a choice but to redefine themselves – partnering with disruptive and innovative primary care groups, investing in hospital-at-home, and renegotiating how, and for what, they get paid. They’ll need to shed their reliance on the current model of owning/operating everything and embrace partnerships to let those with the best talent, capabilities, cost structure and specialization create synergy with the hospital system.
I know many of the smart, innovative people running hospital systems or consulting for them. Let’s not take healthcare delivery the route of the legacy cable companies. In our industry, it’s not just economic value at stake. Lives are also at stake.
