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Healthcare organizations in general and hospitals in particular are in the midst of challenging times driven by a number of disruptions in the industry. The traditional response of replicating best practices is only marginally effective in a disruptive environment because of the significant constraints of politics, industry structure, and organizational inertia. However, our work with leading healthcare organizations has revealed new approaches to developing effective strategies for the emerging healthcare environment.THE ACA AS A DISRUPTIVE FORCE IN HEALTHCAREClayton Christensen (2008) introduced the concept of creative disruption to the healthcare industry. His basic theory of disruption is a process by which complicated, expensive products and services are transformed into simple, affordable ones. Disruptive solutions emerge almost always through new companies or totally independent business units that create new, value-added processes. However, significant disruption has arrived in the healthcare sector in a way not imagined by Christensen. It came from the Affordable Care Act (ACA).Underlying the ACA are two main principles. The first is a systems perspective. For example, the ACA builds on the effective work of large healthcare delivery systems to encourage the systemic integration of care (The Patient Protection and Affordable Care Act [PPACA], §3022, 2010). The second major principle is the ability of free enterprise and markets to restrain costs and increase quality (e.g., health insurance exchanges) (PPACA, §1311, 2010). Under Christensen's idea of disruptive solutions, it seems that managers should be at the forefront of knitting together new concepts of cost containment, quality, and exceptional service to transform their organization into providers of simple and affordable solutions within the context of ACA principles.Rather, we believe that managers, in addressing the two driving ACA principles, are responding primarily with an internal focus. ACHE released its 2014 CEO survey (ACHE, 2015), which identified the top issues facing hospital CEOs: financial challenges, healthcare reform implementation, and government mandates. Clearly, the ACA has placed managers on the defensive. Managers cannot ignore the immediate financial and mandated demands placed on their institutions, and their major concern is preserving their organizations. They are responding by cutting costs to meet pricing constraints and seeking new mechanisms to gain revenue. To accomplish this, they are using the traditional management tools of analytically based containment, operational improvement protocols, and employee engagement and motivational development.Although these initiatives are necessary, they are not sufficient to succeed strategically in the healthcare reform environment.RESPONDING TO DISRUPTIONSuccess occurs with an organizational strategy that focuses on new processes and services that meet the healthcare and financial needs of the customer while disrupting the status quo. However, this new strategy must also continue to align with the ACA's systems perspective and approaches to market competition.Interaction Between Patients and ProvidersOne general disruptive approach is to consider the system from the standpoint of the interaction between patient and provider and then create a system of the suppliers of goods and services that support this core interaction. Managers then can understand how various stakeholders approach this interaction. With these approaches come customer/patient choices and the resulting disruptive solutions Christensen identified.Macro TrendsAnother general disruptive approach is to consider macro trends. For example, technology is changing the delivery system and forcing managers to change the way they look at their processes. New points of care delivery are evolving, with specialty kiosks, wearable devices, and employer-based or retail clinics connected to electronic health records. … |
