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February 07, 2012

Healthcare Disruption: Providers Are Making Newspaper Industry MistakesPosted by on February 07, 2012 | Comments

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Since the latter half of the 90's, the handwriting has been on the wall for newspaper companies that media's future was digital. Heck, the newspapers' own business sections reported on this trend. Despite this, the majority of the industry focused on traditional strategies such as taking on debt to acquire other newspapers or investing in new printing presses, leading to disastrous consequences.

To be fair, there were some digital investments made, including hiring top-drawer talent. However, over time, the digital teams were marginalized and ultimately the talent that had the capability to transform these organizations left for opportunities where their hands weren't tied. In other words, the commitment wasn't deep enough to effect a true transformation.

Now consider healthcare in the U.S.: There's a clear understanding that the industry must shift its focus towards outcomes from "do more, bill more" orientation. If ever there was an industry that should understand that it's more effective to address underlying conditions than treating the symptom, it should be healthcare. Or, as a famous early newspaper publisher stated, "an ounce of prevention is worth a pound of cure." Prevention-focused countries such as Denmark have dramatically lowered the need for hospitals. Once at 155 hospitals, they are at less than a third of that today. I find this easily-known fact is news to healthcare providers I speak with.

Whether they don't know these facts or are ignoring them, the fact is there are incredibly large capital investment projects on the docket for many health systems. Since 62% of hospitals are mission-based, non-profit organizations, it's astonishing that they are more focused on capital projects than addressing the overall health of their communities. No one has made the case, for instance, that chronic conditions that consume 75% of the $2.6 trillion tab in the U.S. is best addressed by building more buildings. Some make the case that there's a growing healthcare real estate bubble while costs of chronic conditions continue to expand.

In healthcare, it's as though we are building better firehouses and investing in more firefighting equipment while we do the equivalent of leaving oily rags around, letting kids play with fireworks on dry hillsides, and building structures with one exit. We may have the best "firefighting" tools and talent in the world but we'd be much better off if we prevented those "fires" from starting in the first place.

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