What size healthcare system do you want to be and why?
A few years ago, I was in a boardroom meeting with the senior executive team, board leadership, and a consultant. The topic of the moment was debating how large the system should become and why? At the time, perhaps still today, the conventional wisdom was that $5B in health system net revenue was the scale necessary to lead and make a meaningful impact in a given major metropolitan statistical area (MSA). The number was much like the 10,000 steps per day target used for walking and staying fit. Why 10,000 (ChatGPT it…); and why $5B? The better question to ask is, “What’s our strategic goal as a healthcare system?” If it’s to make as much money as possible, that may lead to one approach. If it’s to improve the health of the community you serve, that may lead to another. Perhaps it’s a combination of both? My intent here is to lay out the logic of how to choose.
It can be trite, but start with the mission of the organization and ask why you exist? For example, if it’s to make a profit for your shareholders, your strategic decision making takes you down a certain path. If it’s to improve the health of the communities you serve, then the next question you may ask is which communities? This leads you to develop a clear vision of what to do to fulfill your mission. Let’s take the second example.
There are generally five (5) geographic size-types of healthcare systems: local, regional, super-regional, national, and international; and may also include a specific disease focus. Selecting your target communities can be informed by how you intend to improve your target community’s health and constrained by what you can afford to accomplish. For example, if you look at an organization like St. Jude Children’s Research Hospital, they state that they exist to “advance cures, and means of prevention, for pediatric catastrophic diseases through research and treatment. …no child is denied treatment based on race, religion, or a family’s ability to pay.” They serve all 50 states in the US and treat patients from around the world. Their operating model is built to service this mission and strategic vision.
Once you have clarity on your mission and strategic vision you may ask how will you measure success? Your key performance indicators (KPIs) should be specific, measurable, realistic and tie directly back to your vision within a specified time frame, if possible. You may also consider a rubric with which to build your strategic model. For example, you may organize your KPIs around the consumer experience (brand), clinical outcomes (eliminating childhood cancers) and cost (no child will be turned away due to finances). You should pressure test your model with the competitive set, the market conditions, and your brand. Can you achieve your vision within the constraints you establish in your strategic model? Last, can you fulfill the brand promise you make with your strategic vision?
Determining the size and scope of your organization requires a thoughtful exercise; only then can you determine your future state. While many C-Suites and Boards may not have the patience to do this difficult work I would posit that it is required and should be done regularly. I welcome your comments, suggestions, and thoughts.
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