Global

Details

  • Industry: Healthcare
  • Type: Survey report
  • Date: 4/16/2013

Providers: transact or transform? 

Providers: transact or transform?
As payers become more activist, the role of the provider is also being challenged by old and emerging pressures. How should providers react to the rise of ‘activist payers’? How will providers adapt to demographic and epidemiological change? What is achievable given the ongoing financial and economic challenges in most parts of the world?

At KPMG’s global summit, a number of providers from various regions suggested that the current model actually delivers strong margins for some hospitals. Why should they change, they asked, if profits are still flowing?


Recommendations for providers

  • Providers need to fundamentally reshape their approach and they must do it quickly. There are a range of options available, but all will require new skills and ways of working.
  • Being operationally excellent remains important but much more must be achieved.
  • Many providers think they can grow organically as the demand for healthcare grows. Many of them will be wrong. If their current model is not working, simply making it bigger will not make it work any better nor solve its fundamental problems. Failing to deal with this poses a significant risk to their survival.
  • New approaches will include creating integrated health systems where appropriate, building specialist networks, or focusing on areas of special expertise.
  • For many, the logic is to take more responsibility for the whole of the patient journey or for the longer term health of populations. There is a need to move away from providing episodes of care to providing or orchestrating the whole package. As with payers, this means less focus on volume and much more on value.
  • Investing in leadership will be key, as will the creation of new relationships with clinical staff.
  • Building networks, learning from other markets and better use of information to gain strategic advantage will come to the fore.

“Looking around the world, we see mounting evidence that the status quo cannot last.”

But looking around the world, we see mounting evidence that the status quo cannot last. Even in the fastest growing emerging economies, the current system seems in trouble. Indeed, the writing has been on the wall for some time, but it is only now starting to get tough. Provider executives in emerging economies and systems that are still growing have an opportunity to leapfrog some of the outdated models in the more established systems.


For providers, today’s challenge is to balance the pressure of becoming as efficient as possible within their current models, while creating the right environment for transformational change to new models. For some, this will lead to a more integrated system; for others, different options will emerge such as specializing or focusing their operations. Just about the only option that is not on the table, however, is to do nothing. Our delegates were clear that bold and innovative approaches would need to be combined with forward thinking and (in some cases substantial) changes to operational and business models for real and lasting change to emerge.


At the outset, providers will need to consider their objectives and future strategies based on two main sets of considerations: what markets they want to operate in (both in terms of geography and products) and whether improvement or transformation is required. This will invariably lead providers to three broad, overlapping sets of approaches:


  • Continue to grow the current model while improving operations and delivery;
  • Adopt new approaches built on existing models; or
  • Develop very different models for new or current markets.

Regardless of the approach, the scale of change is huge. Opportunities abound for those providers prepared to move ahead, take risks and try to shape the future rather than respond to it. In some cases, the ambition and pace of change (particularly in the emerging economies) has been breathtaking; in other parts of the world, progress has been slower to come.


Over the following pages, we will look at the different components of each strategic option to show how providers across the globe are adapting and advancing their strategies.


“What we can learn is that regardless of what payer system we’re in or what national scheme we’re in… at the root is how do we care for people and how do we motivate those people who do the caring,” says Dr. Kevin Smith, President and Chief Executive Officer of St. Joseph’s Health System, Hamilton, Canada.

 

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