Greetings from Long Beach and the closing day of our 2018 OPEN MINDS Management Best Practices Institute. Throughout the week there were many discussions about the ”what” and the “how” of service delivery: what are the service models that work for consumers, and what are the management practices that make those services financially sustainable?
I walked away from the week with a couple key impressions. First, the lack of agreement about service outcomes are a continuing problem in the health and human service markets serving complex consumers. Without a performance “end point” it is difficult to know what “works” and how to measure performance. It is also difficult to make the case for reimbursement of innovative program models.
Second, many provider organizations in the complex consumer market space are providing “dated” services—in large part because that is what payers and health plans will buy right now. A portfolio of aging service lines creates many problems for provider organizations, from the creation of “market space” for competitors, to dwindling profitability.
How can executive teams overcome these challenges? In my closing keynote, Reinventing Your Organization: Key Management Best Practices For A Value-Based World, I outlined my recommended approach for building a healthy service line portfolio. The approach has three key components: adaptive standardization of current service lines, deliberate and continuous service line evolution, and on-going performance management.
Adaptive standardization is the concept of creating an organizational approach where all common services are delivered with a standard, replicable protocol (both clinical and administrative). Standardization is important because it provides the basis for scalable growth, a consistent consumer experience, and improves processes and profitability. As the health and human service field becomes more competitive and moves to more value-dependent models of reimbursement, executive teams need to shift their framework from one of “offering a service” to “running a business.” Service line standardization is a key part of that. Many people are familiar with the work of the field’s “guru” of service standardization, Atul Gawande, and his “checklist manifesto” (you can read our analysis of his work in The Three New Rules For Innovation, Can Mental Health Care “Be Big”?, and Be Big? Be Like The Cheesecake Factory).
Deliberate and continuous service line evolution is another element in maintaining financial sustainability. To use portfolio management terms, the “cash cows” (core services that drive steady profits) of previous years are producing smaller and smaller margins (see Ten Keys to Increase Organizational Profitability, Service Line Portfolio Analysis for Health & Human Services: Business Tools for Looking at Margins, Diversification, and Resource Allocation, and Survival for Non-Profits in an Economic Downturn: Tactics for Keeping Your Revenue Flowing). This is due to a combination of factors—the “commodity” market status of many of those services, new competitive offerings, and changing customer preferences.
Executive teams need to embrace two activities that should be “baked” into the strategic planning process. First, identifying the “cash cows” of the future. Every organization needs a “vision” of their role in the health and human service system of the future—and then need to design core services that support that role. This requires “big picture” thinking, a structured service line assessment and development process, a two-year (or more) collaboration with payers and health plans, and capital. Second, executive teams need to decide how their organization is going to evaluate new treatment technologies and scientific developments—in a structured and organized fashion—to help extend the effective life of the current services in their portfolio (see How To Make Technology Work For You: The Four Pillars Of Strategic Tech Success). Since it takes the whole of the health and human service field 17 years to adopt new science (see Add ‘Speed’ To Your Treatment Tech Planning List and Why Is It So Hard To Get Health & Human Service Organizations To Try Something New?), it makes early adoption of innovation a market advantage if your organization can pull it off.
Finally, your executive team can’t pull off adaptive standardization or continuous service line evolution without performance measurement and performance management. If there is any basic management competency that health and human service organizations need, it is metrics-based management. (For more on metrics-based performance management, see Creating A Culture Where Metrics-Based Management Can Succeed, Your Team Can’t Perform (Or Manage) Without Those Numbers, and Is Your Culture Performance-Driven? Take The Test.) Competitive advantage, investment prioritization, continuous process improvement and more are dependent on an executive team that can manage using the numbers.
The health and human service market has been long on good intentions and short on best practices. Cost pressures, competition, and value-based reimbursement models will give organizations with established clinical and administrative best practices the edge.
For more live coverage from Long Beach this week, tune in next week as we continue to report on the The 2018 OPEN MINDS Management Best Practices Institute—and be sure to check out our ongoing live and archived coverage of the event on Twitter @openmindscircle – #OMBestPractices.