By JOE FLOWER

The system is unstable. We are already seeing the precursor waves of massive and multiple disturbances to come. Disruption at key leverage points, new entrants, shifting public awareness and serious political competition cast omens and signs of a highly changed future.

So what’s the frequency? What are the smart bets for a strategic chief financial officer at a payer or provider facing such a bumpy ride? They are radically different from today’s dominant consensus strategies. In this five-part series, Joe Flower lays out the argument, the nature of the instability, and the best-bet strategies.

Providers:

Cost. Get serious control of your costs. Most providers I talk to are dismissive. “Yeah, yeah, you’ve been saying that for 10 years. We’re on it, believe me.” But I don’t believe them. Observation of the industry makes it clear that most healthcare providers have not gone after costs with nearly the ferocity of other industries. Some providers that I have worked with and interviewed over recent years have gotten their full cost of ownership down to a level where they can survive on Medicaid rates (that’s not a typo, I mean Medicaid) and build bigger, stronger systems at the same time. They have proven it can be done. But this is far from the industry norm. In the new competition, getting your costs seriously down is not the way to win. It’s just the price of admission. In the new competition, any entity that can deliver any particular service at a lower price will steal that business from you. You need to be that entity.Overtreatment and waste. Do a deep and honest analysis of how much of your book of business is actually not effective, not necessary, does not deliver value or satisfaction to the customer—because that book of business is likely to wither away

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