High-Volume Focus Hospitals―Value Innovation in Health Care

  • 1,832 views
Uploaded on

High-Volume Focus Hospitals are about to explode onto the health care conversation. The model halves the local cost of surgery, delivers top medical outcomes and creates experiences patients …

High-Volume Focus Hospitals are about to explode onto the health care conversation. The model halves the local cost of surgery, delivers top medical outcomes and creates experiences patients prefer.

Over the next few years the main operator will build 40,000 beds in both high-cost and low-cost environments.

Most hospital medicine is developed for the 8% to 10% of the world's population that can afford surgery. The rest go unserved. This model expands the pool of people who can be helped, saves money in richer countries and returns above average profits to owners.

Operators of existing hospitals need to pay attention too. When High-Volume Focus Hospitals open near you, they could hollow-out profitable surgeries, leaving hospitals with mostly, cost centers.

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
No Downloads

Views

Total Views
1,832
On Slideshare
0
From Embeds
0
Number of Embeds
1

Actions

Shares
Downloads
0
Comments
0
Likes
3

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. The Undeveloped Customer Title Un developed Customer The Scott Frankum The Well Report Hospital Build Conference Dubai, June 2011
  • 2. 25 Billion Leaves the GCC Value Innovation Could Reverse Regional Outflows
  • 3. 17 8 46 14 18 36 48 25 Billion Outflow Greater Middle East Declared Medical Tourism Countries Cypress 1 Egypt 3 Israel 7 UAE 48 $44,000 Jordan 7 Kuwait 2 Lebanon 2 Qatar 6 Saudi Arabia 36 Yemen 1 Turkey 46 Outbound Destinations India 17 $9,000 Thailand 14 $12,000 Singapore 18 $18,500 Malaysia 8 $9,000 Turkey 46 $16,500 =Number of JCI accredited hospitals in the Country =Price of Heart Bypass Surgery (U. S. $50,000 to $130,000)
  • 4. Strategic Choices
    • Low Price – Low Differentiation
    • “ Walmart Territory”
    • China
    High Price – Low Differentiation
    • High Price – High Differentiation
    • Singapore
    • Korea
    • Thailand
    • Saudi Arabia
    • Jordan
    • UAE
    • Israel
    High Price Low Differentiation High Differentiation Low Price
    • Low Price – High Differentiation
    • India
    • Malaysia
    • Turkey
    • Costa Rica
    Avoid Fast Growth = Rising Prices Change Differentiation Easier Than Price
  • 5. High Differentiation Low Price – Low Differentiation “ Walmart Territory” High Price – Low Differentiation High Price Low Differentiation Low Price Differentiated Line China = Price More Uses of Strategy High Price – High Differentiation Turkey = East & West Thailand = Hospitality Singapore = Science & Technology Low Price – High Differentiation UAE= Arabian Leader India = Value Malaysia = ?
  • 6. Bass Model= Capture the key 1% f (t) = p + qF(t) 2 1 - F(t) 1% Super-Influencer f (t) = rate of change F (t) = installed base p = coefficient of innovation q = coefficient of imitation
  • 7. Greater Middle East vs. Asian Leaders X Y
  • 8. Value = U. S. Health Reform Measures and Publishes 65 Quality Points Rewards Increases in Value Measured by Patient Results Encourages Value and Process Innovation Patient Results Dollars Spent
  • 9. Hospital construction will split into two Intuitive Empirical Precision Best for Intuitive Medicine Diseases That Are Statistical Outliers Difficult to diagnose Consultative Expensive Twice the Price Will always be much more expensive than Solution Hospitals . Hub & Spoke Model Artisan Model Customized Care Inefficient at Handoff Data is hard to track Mistakes are hard to track Hard to predict costs
    • Precision Medicine
    • Most popular surgeries
    • Known diagnosis & treatment
    • Automated & routinized
    • Combines with Telemedicine to serve more
    • Price – Profit = Design
    Top 8% to 10% Value gains are incremental Cost + Profit = Price
    • Empirical Medicine
    • Trial & Error Treatments
    • Best results are in a purpose-built, whole spectrum treatment facility
    • Gains from routinization & automation are limited by the nature of chronic disease
    • Goal is to push more medicine into the precision category, then automate to make it better and cheaper
    Pull-Strategy Compete for Market Share Fight for Existing Demand Hub & Spoke High-Volume Focus Hospitals (HVFH) Localization Adaptable Customizable Cultural & Religious Norms Vary amenities Add some services Eliminate others Governance Fast learning & improvement Isolates problems Jumpstarts institutions (schools, certificates, training) Telemedicine = coverage Social Justice Bottom 95% Strategy Simultaneous pursuit of both differentiation & low costs Push strategy Create new demand Developed low, re-introduced higher in new or mature markets Requirements Manufacturing model High volumes Purpose built facility Highly process dependent Built for scale HVFH Better medical outcomes Patients prefer the experience Value innovation pricing Quality gains from specialization & process design Price gains from process design & lean manufacturing principles Routinized & Automated Step 1 Step 2 Step 3 Step 4 Step 5 Step 6
  • 10. $10,000 Heart Surgeries in the Cayman Islands
    • In 2013, the first phase of a private High-Volume Solution Hospital for heart surgeries opens in the Cayman Isl and s.
    • The Caymans are resort islands and tax havens of 55,000. It is an Overseas Territory of the U.K.
    • Phase 1 is 150 beds of a master-planned 1500 bed hospital, a medical university and 3,000 assisted living accommodations.
    • How $10,000 heart surgeries near the U. S. are possible: Value and Process Innovation
  • 11. The Volume Model: Narayana Hrudayalaya―Health Care for All
    • Privately held with above average returns to investors
    • India’s cheapest heart surgeries: <$3000
    • Hopes for an $800 surgery
    • Perform 12% of all Indian heart surgeries
    • Adding 40,000 high-volume solution hospital beds over next 5 years
    • Better outcomes, better patient experience
    • Offer discounted rates on 40% of surgeries
    • Bangalore, Kolkata, Cayman Islands and ?
    • Value Innovation in health care has arrived
  • 12. High Volume Single Disease Solution Hospitals Low Price – Low Differentiation High Price – Low Differentiation High Price – High Differentiation High Price Low Differentiation (Amenities) High Differentiation (Amenities) Low Price Low Price – High Differentiation Avoid Country positioning improves dramatically, too
  • 13. The Middle East Business Case
    • Can new hospitals get to volume?
    • Can investors trust a model that is proven but not replicated?
    • What is the operations “recipe” for Value Innovation?
      • Public Owners Want:
        • To Raise quality, serve more patients, raise home grown practitioners, create stability, make value visible, engender trust and create expertise
      • Private Owners Want:
        • Superior products, value attributes and experiences, create brands, higher returns, build defenses
      • Charitable Trusts Want:
        • A sustainable model to serve poor patients
        • To create culturally and religiously sensitive models of care
    • First Movers
      • Will be very hard to catch because of fast learning
      • Smart movers will offer total solutions beyond traditional offerings
  • 14. Social Justice
    • HVFHs add predictability, participation and future-orientation to disenfranchised and middle class
    • Large patient pools lower the volume requirement risk while achieving social justice goals
    • HVFHs can link to Micro-Insurance
    • Combine with Telemedicine
    • The nation-building potential of the model is obvious.
    • The Greater Middle East’s history of charity in regard to health care could adapt the model in compelling ways.
    • Nations seeking to develop expertise fast could balance educational and surgical goals with charitable surgeries.
    • NH establishes schools, training and certificate programs at its high volume hospitals.
  • 15. The Two-Speed World
    • Current Thinking on Product Development for High-Growth, Low-Cost vs. Low-Growth, High-Cost Environments
    • Care providers have to meet the needs of both low-growth and high-growth markets
    • Value Innovation pursues both differentiation and lower costs to create uncontested market space
    • Richer, low-growth countries use Cost + Profit = Price
    • Poorer, high-growth countries use Price – Profit = Design
    • If you add quality or amenities to the scaled down product, it starts to resemble the much more expensive product originally sold in developed markets, but at far lower costs
    • You can see the high-low relationships in action in the Narayana Hrundayalaya Bangalore to Caymans story
    • Prediction: Over time, High-Volume Solution Hospitals will hollow-out General Hospitals
  • 16. Key Takeaways
    • The strategic move to create both differentiated products and low prices is the single most important step toward value innovation a firm can take.
    • Value Innovation would change the regional attractiveness to medical travelers dramatically and, likely recover some of the 25 Billion outbound spend.
    • Why you want to explore this now: NH is the only major organization in the space, but is mid-transformation into a global brand. The Greater Middle East seems like a logical place for first movers to enter and win.
    • The highest value companies like Apple don’t usually invent technologies. They combine existing business processes to create things customers like. HVFHs offer a way to create real economic and social value through unique combinations of features that meet local needs and also deliver higher than average (possibly spectacular) profits.
    • If 8% to 10% of the global population can afford surgeries at hub and spoke costs, then the business and social opportunities providing health care to the bottom 90% could be transformational.
  • 17. Sources 1 Interactive, A., 1st Annual Crowdsourced Survey on Emerging Marketing , in Insights in Action 2011: Farmington, CN. School, H.B., Attention Medical Shoppers: What Health Care Can Learn from Walmart and Amazon, , in HBS Working Knowledge , C. Nobel, Editor 2011. System, M.C.f.U.S.H. The Basic Health Plan – An Emerging Option for States 2011. W. Chan Kim, R.M. Blue Ocean Strategy: How to create uncontested market space and make the competition irrelevant. Blue Ocean Strategy, 2005. Miller, C.C., Bringing Comparison Shopping to the Doctor’s Office , in New York Times 2010, The New York Times Company: San Francisco, CA. Wharton, I.K., C.K. Prahalad 'The Poor Deserve World-Class Products and Services' , T.U.o.P. Wharton, Editor 2008, Wharton, The University of Pennsylvania. Shaller, D. Consumers in Health Care: The Burden of Choice . 2005. Kiviat, B., Could price tags save American health care? , in Time Magazine 2010, Time.com: Blog. Teisberg, E. Creating a High-Value Delivery System for Health Care . in Federal Reserve Bank of Chicago . 2008. Detroit, MI. Wallace, E.T.a.S., Creating a High-Value Delivery System for Health Care , in Seminar Thoracic Cardiovascular Surgery 2009: Boston, MA. Hani Elias, C.C., Bowen Garrett and Bob Kocher Cross-Currents in the Health Economy . McKinsey Center for U. S. Health System Reform, 2010. Labs, S.N., Designing Smart Health Care Technology Into the Home of the Future , in Workshops on Future Medical Devices Home Care Technologies for the 21st Century , S. Warren, Editor 1999: Rockville, MD. Lapowsky, I., Domestic Medical Tourism , in Inc. 2011, Mansueto Ventures, Inc.com. Haar, A. Dona Hills, Queens Long Island Medical Group (QLIMG) . Medical Travel Today, 2011. Bowen Garrett, C.C., Bob Kocher Employers planning now for a post-reform world . Reform Center Health Intelligence, January 10, 2011 Charles Ornstein, T.W., Financial Ties Bind Medical Societies to in USA Today and ProPublica 2011, ProPublica: San Francisco. Journal, I.M.T. Fortis to enter into new healthcare verticals . International Medical Travel Journal, 2011. Stuart L. Hart, C.K.P., The Fortune at the Bottom of the Pyramid. Booze Allen Hamilton Strategy + Business, 2002. Prahalad, C.K. The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits . Knowledge @ Wharton, 2004. L. Al-Gazali, H.H., Shaikha Al-Arrayed, Genetic Disorders in the Arab World. British Medical Journal, 2006. 333 (831). Kasarda, J., Global Airport Cities , in UNC Frank Hawkins Kenan Institute of Private Enterprise , I. Media, Editor 2010. Haar, A. Harry Greenspun, M.D., Dell Services . Medical Travel Today, 2011. Volume 5 . Keckley, P., Health Care Reform Memo: May 23, 2011. Deloitte Center for Health Solutions, 2011. Anand, G., The Henry Ford of Heart Surgery - In India, a Factory Model for Hospitals Is Cutting Costs and Yielding Profits , in The Wall Street Journal 2009, The Wall Street Journal: New York. Staff, Hip Replacement vs. Hip Resurfacing , in New York Times 2010, New York Times Company: New York, NY. Teisberg, E., How Physicians Can Change the Future of Health Care. Journal of the American Medical Association, 2007. 297:1103:1111 (297:1103:1111). Teisberg, E. Improving Value in Health Care Delivery . 2010. Teisberg, E., In Health Care, the Best Way to Contain Costs is to Improve Quality. , 2010: Stoos, Switzerland. Robbins, S., Indian Surgeon Devi Shetty Targets Medical Tourism in Cayman Isles , in Reuters 2011, Thompson Reuters. Wharton, K., Innovation - the New Two-way Play , in Knowledge @ Wharton , U.o.P. Wharton, Editor 2011, Wharton, University of Pennsylvania.
  • 18. Sources 2 Foundation, H.J.K.F. Kaiser Summary of the New Health Reform Law . Focus on Health Reform, 2010. Brody, J., Less Invasive Hip Surgeries Make Inroads , in New York Times 2010, The New York Times Company: New York. Bhatnagar, J., Marrying Hospitals with Hotels , in The Financial Express 2011, The Indian Express Limited: Mumbai. Singh, S., Mass-Market Medicine , in Forbes 2007, Forbes, Inc. others, P.K.a. Medical Home 2.0: The Present, the Future . Deloitte Center for Health Solutions, 2011. Nicola S. Pocock, K.H.P., Medical Tourism and Policy Implications for Health Systems: a conceptual framework from a comparative study of Thailand, Singapore and Malaysia. Globalization and Health 2011. Services, U.S.D.o.H.H., Medicare Hospital Value-based Purchasing Plan Development , U.S.D.o.H.H. Services, Editor 2007, United States Government: Washington, DC. Michigan, B.C.B.S.o., Medicare proposal would use Accountable Care Organizations to improve quality, rein in costs , in News Release 2011, Blue Cross Blue Shield of Michigan. Staff, Mohammad Issues Law Establishing Dubai Healthcare City Authority , in Gulf News 2011: Dubai. Weeks, C., Multiple Sclerosis Patients Navigate the Minefield of For-Profit Care , in Globe and Mail 2011: Ontario. Wharton, U.o.P., Narayana Hrudayalaya A Model for Accessible, Affordable Health Care , in India Knowledge @ Wharton 2010, Wharton, University of Pennsylvania. Tarun Khanna, V.K.T., Merlina Manocaran, Narayana Hrudayalaya Heart Hospital: Cardiac Care for the Poor. N9-505-078, 2005. Aron, R., No Other Choice: Why Medical Tourism Continues to Thrive , in India Knowledge @ Wharton , K. Wharton, Editor 2011, Wharton, University of Pennsylvania. The Patient Protection and Affordable Care Act of 2010 (Public Law 111-148), as amended by the Health Care and Education Reconciliation Act of 2010 , 2010: Washington, DC. Laura Gore, J.L. Poll of Emergency Physicians Shows More Than Half Order Tests as Protection Against Being Sued . American College of Emergency Room Physicians, 2011. Melisa Alvarez, R.C., Richard Smith, The Potential for Bi-lateral Agreements in Medical Tourism: A qualitative study of stakeholder perspectives from the UK and India. Globalization and Health, 2011. Teisberg, M.P.a.E., Redefining Health Care: Creating Value-Based Competition on Results 2006: Harvard Business Press. Wharton, U.o.P.a.B.C.G., Rethinking Operations for a Two-speed World , in Special Report , K. Wharton, Editor 2011, Wharton, University of Pennsylvania. Gupta, A., Running for Cover - Yeshasvini Insurance , in Hindustan Times 2011: Bangalore. Allam, A., Saudi Health Gaps Offer Private Opportunity , in Financial Times 2011: London. Haederle, M. Save Money on Your Medical Care — Take a Trip . AARP Bulletin, 2010. Fox, S., The Social Life of Health Information, 2011 , in Pew Internet & American Life Project 2011, The Pew Research Center: Washington, DC. Staff, South Korea Wants to Expand Medical Tourism Beyond Cosmetic Surgery , in IMTJ 2011: London. Porter, M., A Strategy for Health Care Reform — Toward a Value-Based System. New England Journal of Medicine, 2009. 361 (109). Whelen, D. The Survivor: Clay Christensen’s Prescriptions for Health Care . Forbes, 2011. Thornton, G., Transforming the Middle East’s Healthcare Model , in Industry Reports , G. Thornton, Editor 2009, Grant Thornton: UAE. W. Chan Kim, R.M. Value Innovation: The Strategic Logic of High Growth . Harvard Business Review 1997. Porter, M. Value-Based Health Care Delivery . in The Centennial Global Business Summit . 2008. Boston, MA: Harvard Business School Others, P.K.a. Value-based Purchasing: A Strategic Overview for Health Care Industry Stakeholders . Deloitte Center for Health Solutions, 2011.
  • 19. Scott Frankum www. TheWellList.com @TheWellReport [email_address]