DEBATE Open Access Catalyzing marketing innovation and competitive advantage in the healthcare industry: the value of thinking like an outsider James K. Elrod1 and John L. Fortenberry Jr.1,2* Abstract Background: Marketing arguably is the most critical administrative responsibility associated with the pursuit and realization of growth and prosperity, making prowess in the discipline essential for any healthcare institution, especially given the competitive intensity that characterizes the industry. But in order to truly gain an advantage, healthcare establishments must tap into innovative pathways that their competitors have yet to discover. Here, thinking like an outsider can pay tremendous dividends, as health and medical organizations tend to focus inwardly, limiting their exposure to externally-derived innovations and advancements which often can supply differentiation opportunities. Discussion: Some years ago, during a formative period in preparation for expanding its footprint, Willis-Knighton Health System opted to think like an outsider, peering beyond the walls of healthcare institutions in search of tools and techniques that would allow its growth ambitions to be realized. Associated pursuits and subsequent successes created a culture of challenging status quo perspectives, affording innovations and resulting competitive advantages. Marketing advancements, in particular, have been fueled by this outsider mentality, benefiting the institution and its patient populations. This article profiles several of these advancements, discusses the dangers of insular mindsets, and suggests avenues for encouraging broad perspectives. Conclusions: Due to extreme competitive intensity and ever-increasing patient needs, health and medical establishments must perform at optimal levels, with marketing efforts playing a critical role in the achievement of such. By shedding status quo perspectives and peering beyond the walls of healthcare institutions, health and medical providers have opportunities to discover new and different marketing approaches for potential use in their own organizations, affording mutual benefits, including all-important competitive advantages. Keywords: Marketing, Innovation, Competitive advantage, Hospitals, Healthcare Background Formally defined, marketing is “a management process that involves the assessment of customer wants and needs, and the performance of all activities associated with the development, pricing, provision, and promotion of product solutions that satisfy those wants and needs” [1], p. 288. Close examination of this definition reveals that the discipline is both wide and deep. Specifically, the definition (1) notes that marketing is a process, meaning that it is ongoing and must actively be man- aged; (2) brings attention to the Four Ps—Product, Price, Place, Promotion—which must be formulated for each target audience; (3) indicates that the focus is on the consumer; and (4) conveys that products—go ...

1. DEBATE Open Access
Catalyzing marketing innovation and
competitive advantage in the healthcare
industry: the value of thinking like an
outsider
James K. Elrod1 and John L. Fortenberry Jr.1,2*
Abstract
Background: Marketing arguably is the most critical
administrative responsibility associated with the pursuit and
realization of growth and prosperity, making prowess in the
discipline essential for any healthcare institution, especially
given the competitive intensity that characterizes the industry.
But in order to truly gain an advantage, healthcare
establishments must tap into innovative pathways that their
competitors have yet to discover. Here, thinking like
an outsider can pay tremendous dividends, as health and
medical organizations tend to focus inwardly, limiting
their exposure to externally-derived innovations and
advancements which often can supply differentiation
opportunities.
Discussion: Some years ago, during a formative period in
preparation for expanding its footprint, Willis-Knighton Health
System opted to think like an outsider, peering beyond the walls
of healthcare institutions in search of tools and
techniques that would allow its growth ambitions to be realized.
Associated pursuits and subsequent successes
created a culture of challenging status quo perspectives,
affording innovations and resulting competitive advantages.

2. Marketing advancements, in particular, have been fueled by this
outsider mentality, benefiting the institution and its
patient populations. This article profiles several of these
advancements, discusses the dangers of insular mindsets, and
suggests avenues for encouraging broad perspectives.
Conclusions: Due to extreme competitive intensity and ever -
increasing patient needs, health and medical
establishments must perform at optimal levels, with marketing
efforts playing a critical role in the achievement of such.
By shedding status quo perspectives and peering beyond the
walls of healthcare institutions, health and medical
providers have opportunities to discover new and different
marketing approaches for potential use in their own
organizations, affording mutual benefits, including all -
important competitive advantages.
Keywords: Marketing, Innovation, Competitive advantage,
Hospitals, Healthcare
Background
Formally defined, marketing is “a management process
that involves the assessment of customer wants and
needs, and the performance of all activities associated
with the development, pricing, provision, and promotion
of product solutions that satisfy those wants and needs”
[1], p. 288. Close examination of this definition reveals
that the discipline is both wide and deep. Specifically,
the definition (1) notes that marketing is a process,
meaning that it is ongoing and must actively be man-
aged; (2) brings attention to the Four Ps—Product, Price,
Place, Promotion—which must be formulated for each
target audience; (3) indicates that the focus is on the
consumer; and (4) conveys that products—goods and
services—are used to satisfy customer wants and needs,

3. implying product development and management, and
the necessity to effect exchange. Marketing arguably is
the most critical administrative responsibility associated
with the pursuit and realization of growth and prosper-
ity, making prowess in the discipline essential for any
* Correspondence: [email protected]
1Willis-Knighton Health System, 2600 Greenwood Road,
Shreveport, LA
71103, USA
2LSU Shreveport, 1 University Place, Shreveport, LA 71115,
USA
© The Author(s). 2018 Open Access This article is distributed
under the terms of the Creative Commons Attribution 4.0
International License
(http://creativecommons.org/licenses/by/4.0/), which permits
unrestricted use, distribution, and
reproduction in any medium, provided you give appropriate
credit to the original author(s) and the source, provide a link to
the Creative Commons license, and indicate if changes were
made. The Creative Commons Public Domain Dedication waiver
(http://creativecommons.org/publicdomain/zero/1.0/) applies to
the data made available in this article, unless otherwise stated.
Elrod and Fortenberry BMC Health Services Research 2018,
18(Suppl 3):922
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http://crossmark.crossref.org/dialog/?doi=10.1186/s12913-018-
3682-9&domain=pdf
mailto:[email protected]
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4. healthcare institution, especially given the competitive
intensity that characterizes the industry [1, 2].
But in order to truly gain an advantage, establish-
ments must tap into innovative pathways that their
competitors have yet to discover [1, 3–6]. Here, think-
ing like an outsider can pay tremendous dividends, as
health and medical organizations tend to focus in-
wardly, limiting their exposure to externally-derived
innovations and advancements which often can supply
differentiation opportunities [7]. Outside-the-box
thinking also seems to be in short supply often times,
presenting yet another opportunity to achieve distinc-
tion. Such insular mindsets should not be particularly
surprising to astute observers of the healthcare indus-
try, as health and medical personnel typically work
hand-in-hand with others engaged in like pursuits,
hold memberships in healthcare-related professional
societies, subscribe to newsletters and other publica-
tions which focus on health and medicine, and attend
conferences focused on healthcare topics, limiting
their exposure to innovations and advancements ori-
ginating in other industries and fostering mindsets
centered squarely on developments within their given
work environments [7–12]. But in this very character-
istic of the healthcare industry lies opportunity for
those enterprising health and medical establishments
which dare to think like outsiders [7, 13].
Discussion
Beginning in the 1970s, during a formative period in
preparation for expanding its footprint, Willis-
Knighton Health System opted to think like an
outsider, peering beyond the walls of healthcare insti-
tutions in search of tools and techniques that would
allow its growth ambitions to be realized. Outside-the-

5. box thinking also was encouraged, unleashing inten-
sive creativity which afforded groundbreaking innova-
tions, producing windfall benefits. Among other things,
the institution turned to various structure, product, and
process innovations, adopting the hub-and-spoke
model of organization design [14, 15], establishing cen-
ters of excellence [16], and embracing the practice of
adaptive reuse [17, 18], with each of these approaches
notably emerging from outside of the healthcare indus-
try [7]. Successes experienced on these fronts were
complemented by a range of equivalent successes in
marketing, with each of these being derived not from
following common pathways which looked within the
healthcare industry for solutions, but by pushing the
envelope of creative thought and action, assuming the
role of outsider in search of novel advancements per-
mitting extensive competitive advantages. Notable ex-
amples of such pursuits are as follows.
� Pioneering health services advertising: In the
1970s, Willis-Knighton Health System deployed ad-
vertising years in advance of the healthcare indus-
try’s full acceptance and use of the medium.
Advertising was viewed during this period as being
beneath the dignity of medical organizations, with
some also frowning on the practice due to its poten-
tial to upset the traditional method of patient acqui-
sition: referrals between and among caregivers [1, 3,
6, 19]. Noting advertising’s widespread deployment
by virtually all other industries, Willis-Knighton
Health System forged a new and different pathway,
affording competitive advantages which fueled
growth while status quo market participants lost
ground.
� Modeling patient experiences after hotel guest

6. experiences: Desiring customer service excellence,
Willis-Knighton Health System turned to the hotel in-
dustry for insights permitting enhanced patient expe-
riences, noting parallels between hospital patients and
hotel guests (e.g., both are away from home, both are
immersed in unfamiliar environments). This led to the
provision of a number of value-added offerings, in-
cluding concierge services, complimentary lodging,
and free transportation, greatly elevating customer
service, attention, and support, with the spark igniting
this innovative array of services being an industry far
removed from delivering health and medical care [13].
� Taking a road less traveled to bolster target
marketing efforts: In 1979, Willis-Knighton Health
System identified and pursued an off the beaten path in
its bid to capture market share in pediatric healthcare
services. The direct route—targeting current and
prospective parents—was heavily pursued by
competitors, prompting the institution to seek a
road less traveled which would reach the same
audiences but do so via a different route. Children, as
direct care recipients, supplied one such route,
prompting the institution to develop an associated
bond. Painstaking efforts yielded Willis-Knighton
Health System’s Pediatric Orientation Program,
fostering an affinity between the institution and
children, which in turn influenced parents, affording
opportunities for enhanced patronage in pediatric
medicine and beyond [13].
� Expanding the boundaries of traditional
branding thought: To complement existing
branding initiatives, Willis-Knighton Health System
sought identity opportunities outside the boundaries
of traditional branding thought, leading it to develop

7. a branded stuffed animal—Willis the Bear—to pro-
mote labor and delivery services [13]. The institu-
tion’s iconic teddy bear mascot made his official
debut on Mother’s Day 2001. Presented exclusively
Elrod and Fortenberry BMC Health Services Research 2018,
18(Suppl 3):922 Page 46 of 48
to mothers who deliver their babies at Willis-
Knighton Health System, Willis the Bear significantly
elevated awareness of the institution’s labor and de-
livery services, illustrating the power and utility of
supplementing traditional branding pursuits with
nontraditional, expanded perspectives.
� Becoming an owner-operator of digital bill-
boards: In 2018, Willis-Knighton Health System ini-
tiated an innovative communications pursuit,
effectively entering the outdoor advertising business
by installing digital billboards at several of its locations.
This endeavor paired institutional assets (e.g., excellent
locations, outstanding roadside visibility, high traffic
counts) with a relatively new technology (i.e.,
digital billboards) to create a unique marketing
communications asset. Unlike the fairly common
digital signage fronting many establishments,
Willis-Knighton Health System replicated the size
and appearance of the digital billboards used by
outdoor advertising companies, presenting a famil-
iar format to passersby and achieving a high com-
munications impact, yielding numerous
competitive advantages.
� Encouraging personnel to view themselves from

8. the perspective of patients: Willis-Knighton Health
System has encouraged patient attentiveness and
empathy throughout its history, investing heavily in
assets designed to facilitate the best patient experiences
possible [13]. Given the vital role of health and medical
personnel in achieving exceptional patient care and
support, the institution suggests a reflective exercise
that encourages staff members to see themselves and
their actions from the perspective of patients. Asking
the operative question,“Am I seeing things through the
eyes of patients?” serves as an effective reminder of pri -
orities, building empathy and motivating personnel to
continually deliver their very best. In many respects,
viewing oneself from the perspective of patients
represents the ultimate example of thinking like
an outsider.
The marketing innovations and resulting competitive
advantages afforded by the pursuits and practices noted
above would never have been realized without shedding
internal industry mindsets in favor of more global per-
spectives. Profoundly impacting the state of innovation
at Willis-Knighton Health System, this broad, inquisitive
view fostered new ways of addressing challenges which
amplified performance and ultimately supplied numer-
ous mutual benefits. An external focus, effectively repre-
senting a window to the outside world, is imperative for
examining the state of innovation across business and
industry, nurturing ideas that might potentially be trans-
ferred for use within healthcare establishments and
encouraging creativity that could possibly yield fruitful
discoveries and resulting applications [7, 13].
As for achieving an outsider mentality, creative thinking
indeed is essential [13, 20]. This, of course, must be com-

9. plemented by a receptiveness to new and different ideas
and a willingness to experiment. Assuming one has the
potential for creative thought and is situated in a health-
care organization welcoming of innovative ideas and asso-
ciated experimentation, the final ingredient is exposure to
broader perspectives. This can be achieved by engaging in
environmental scanning, making conscious efforts to look
beyond the healthcare industry for innovations and ad-
vancements emerging in other venues, all the while con-
sidering how observed ideas might be used within health
and medical institutions [7, 13].
This does not require significant alterations in one’s
daily work life. Reading trade publications which address
audiences from across business and industry, expanding
personal and professional networks to include those
serving in industries other than healthcare, immersing
oneself in greater society to observe developments, and
similar engagements will afford significant exposure to
perspectives far and wide. For added benefits, informa-
tion sharing sessions can be conducted within healthcare
establishments, permitting staff members to discuss
observations gleaned from their broad searches and pon-
der potential application opportunities in their given or -
ganizations. These and related efforts have greatly
facilitated Willis-Knighton Health System’s marketing
performance, demonstrating the power of thinking like
an outsider as a means of fostering marketing innovation
and competitive advantage.
Conclusions
Due to extreme competitive intensity and ever-increasing
patient needs, health and medical establishments must
perform at optimal levels, with marketing efforts playing a
critical role in the achievement of such. Insular mindsets
which direct attention solely toward the healthcare indus-

10. try are harmful, as they restrict much needed exposure to
the full range of advancements occurring in broad busi-
ness and industry. By shedding status quo perspectives
and peering beyond the walls of healthcare institutions,
health and medical providers have opportunities to
discover new and different marketing approaches for
potential use in their own organizations. As Willis-
Knighton Health System discovered, catalyzing marketing
innovation and competitive advantage indeed is possible
by thinking like an outsider.
Acknowledgments
A special note of thanks is extended to the greater Willis-
Knighton Health
System family for their helpful assistance throughout the
development and
publication of this article.
Elrod and Fortenberry BMC Health Services Research 2018,
18(Suppl 3):922 Page 47 of 48
Funding
Article processing charges were funded by Willis-Knighton
Health System.
Availability of data and materials
Not applicable.
About this supplement
This article has been published as part of BMC Health Services
Research
Volume 18 Supplement 3, 2018: Engaging patients, enhancing
patient
experiences: insights, innovations, and applications. The full

11. contents of
the supplement are available online at https://bmchealthservres.
biomedcentral.com/articles/supplements/volume-18-supplement-
3.
Authors’ contributions
The authors jointly developed the submitted manuscript, with
each performing
critical roles from early conceptualization through to the
production of the full
manuscript. The manuscript resulted from a collaborative effort.
Both authors
read and approved the final manuscript.
Authors’ information
JKE is President and Chief Executive Officer of Shreveport,
Louisiana-based
Willis-Knighton Health System, the region’s largest provider of
healthcare
services. With over 53 years of service at the helm of the
institution, JKE is
America’s longest-tenured hospital administrator. A fellow in
the American
College of Healthcare Executives and honoree as a Louisiana
Legend by
Friends of Louisiana Public Broadcasting, he holds a bachelor’s
degree in
business administration from Baylor University, a master’s
degree in hospital
administration from Washington University School of Medicine,
and an
honorary doctorate of science and humane letters from
Northwestern
State University of Louisiana. He is the author of Breadcrumbs
to Cheesecake, a
book which chronicles the history of Willis-Knighton Health

12. System.
JLF Jr. is Chair of the James K. Elrod Department of Health
Administration,
James K. Elrod Professor of Health Administration, and
Professor of Marketing in
the School of Business at LSU Shreveport where he teaches a
variety of courses
in both health administration and marketing. He holds a BBA in
marketing from
the University of Mississippi; an MBA from Mississippi
College; a PhD in public
administration and public policy, with concentrations in health
administration,
human resource management, and organization theory, from
Auburn
University; and a PhD in business administration, with a major
in marketing,
from the University of Manchester in the United Kingdom. He
is the author of
six books, including Health Care Marketing: Tools and
Techniques, 3rd Edition,
published by Jones and Bartlett Learning. JLF Jr. also serves as
Vice President
of Marketing Strategy and Planning at Willis-Knighton Health
System.
Ethics approval and consent to participate
Not applicable.
Consent for publication
Not applicable.
Competing interests
JKE and JLF Jr. are both employed with Willis-Knighton Health
System.

13. Publisher’s Note
Springer Nature remains neutral with regard to jurisdictional
claims in published
maps and institutional affiliations.
Published: 14 December 2018
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NURSING ECONOMIC$/May-June 2017/Vol. 35/No. 3126
B
USINESS PLANNING IS an
essential business tool for
entrepreneurs – a best
practice approach for
those interested in developing a
small business such as an ambula-
tory clinical practice. Translating
business planning efforts into a
properly prepared business plan
remains an undisputed, effective
necessity in any entrepreneurial
endeavor (Sherman, 2016).

17. For today’s advanced practice
nurses (APNs) with an eye toward
innovation and independence, a
new story is unfolding in an excit-
ing era for these expert nurses.
Sparked by the Institute of
Medicine’s (IOM, 2010) landmark
report, The Future of Nursing:
Leading Change, Advancing Health,
which emphasized the contribu-
tion of nurses to “...building a
health care system that will meet
the demand for safe, quality,
patient-centered, accessible, and
affordable care” (p. 1). APNs have
begun enjoying a wider practice
scope and establishing their own
standalone ambulatory practice
centers (American Academy of
Ambulatory Care Nursing [AAACN],
2017; IOM, 2010; Yee, Boukus,
Cross, & Samuel, 2013).
According to the American
Association of Colleges of Nursing
(AACN, 2017), there are four cate-
gories of APNs: nurse practition-
ers, certified nurse-midwives,
clinical nurse specialists, and cer-
tified registered nurse anes-
thetists. In at least 45 states, APNs
can prescribe medications, while
only 16 states have granted APNs
authority to practice independent-
ly without physician collaboration

18. or supervision. In states where
this independent practice is not
allowed, APNs must practice
under the auspices of a doctor or a
medical institution. However,
APNs are authorized to receive
Medicaid reimbursement. In
December 2016, the Department of
Veterans Affairs granted three of
the four APN roles (nurse practi-
tioners, certified nurse-midwives,
and clinical nurse specialists) the
ability to practice to the full extent
of their education and training.
While the new policy excluded
certified registered nurse anes-
Joyce E. Johnson
Wendy S. Garvin
Advanced Practice Nurses: Developing
A Business Plan for an Independent
Ambulatory Clinical Practice
JOYCE E. JOHNSON, PhD, RN, NEA-BC, FAAN, is Associate
Professor, The Catholic
University of America, School of Nursing, Washington, DC.
WENDY S. GARVIN, MSN, APRN-BC, RN, is Nurse
Practitioner and Senior Medical
Scientific Liaison, Janssen Pharmaceutical Companies of
Johnson & Johnson, Raritan, NJ.
NOTE: As a supplement to this article, a summary business plan
can be found at

19. www.nursingeconomics.net
EXECUTIVE SUMMARY
The driving forces that are moti-
vating many advanced practice
nurses (APNs) to create new,
high-value practices within the
ambulatory care setting reflect
the need for better, higher quali-
ty patient care, a deep commit-
ment to spending healthcare
dollars wisely, and most impor-
tantly, the relentless search for
nursing interventions that lead to
real improvement in the health
of patients.
Business planning provides the
path through which new APN-
run ambulatory practices
become a reality and a success.
A well-developed and sophisti-
cated business plan is an
essential first step in setting up
a successful APN practice that
reinforces APNs’ contributions to
health care, and leads to real
rewards for patients and fami-
lies, APNs, and the healthcare
industry.
127NURSING ECONOMIC$/May-June 2017/Vol. 35/No. 3
thetists, current efforts to include
this valuable cohort advances the

20. progressive national trend to
enable nurses to practice to the
full extent of their education and
training.
In addition, population growth
and the aging of the U.S. popula-
tion have substantially increased
demand for primary care pro -
viders amidst a growing shortage
of primary care physicians
(Carrier, Yee, & Stark, 2011; Van
Vleet & Paradise, 2015). In this
environment, APNs find a fertile
terrain rich with opportunities
and an invitation to enter the
world of small business. While
such opportunities can help nurs-
es to practice to the full extent of
their skills and licensure to
improve American health care
(Johnson et al., 2012; Wilson,
Whitaker, & Whitford, 2012), few
APNs understand the regulatory,
financial, and general operational
business requirements for launch-
ing an independent clinical prac-
tice. In 2006, AACN recognized
this knowledge deficit and de -
fined core competencies for the
doctorate in nursing practice aca-
demic program accreditation.
These core competencies in -
clude proficiency in using eco-
nomic and financial principles to

21. redesign effective and realistic
care delivery strategies and the
ability to employ principles of
business, finance, and economics
to develop effective plans for
improving the quality of health
care. Many innovative and aspir-
ing APNs, including those with
and without advanced degrees,
who are interested in establishing
in dependent ambulatory care
prac tices must first understand
and appreciate basic business
planning principles.
Where does an APN begin to
determine if entrepreneurship is
right for him or her? The first step
is to conduct a serious self-assess-
ment to assure the APN has an
above-reproach clinical skill set,
an exceptional high energy level,
and a fiercely independent pro -
pen sity to succeed. If the APN
meets these rigorous expectations,
the next step is to fully under-
stand all the details of what it real-
ly means to be an entrepreneur.
Around the beginning of the
19th century, Say coined the term
entrepreneur from the French
term entreprendre – to “under-
take” (Stoy, 1999, p. 231). Say sug-
gested change agents seek oppor-

22. tunities for shifting economic
resources away from areas of low
productivity to those with the
potential for higher productivity,
higher yield, and greater value.
Nurse entrepreneurs seek self-
employment by developing di -
verse practices and businesses
that give them the opportunity to
“improve health outcomes with
innovative approaches” (Wilson et
al., 2012, p. 1). These entrepre-
neurs recognize direct accounta-
bility to clients regardless of their
status as an individual or a pub-
lic/private organization that uses
their services (Liu & D’Aunno,
2011). Nurse entrepreneurs might
have an independent clinical
practice, own a business such as a
nursing home or pharmaceutical
company, or operate a consultan-
cy that offers research or educa-
tional services, or other businesses
that include professional writing,
filmmaking, and product develop-
ers (Carlson, 2016; Wilson et al.,
2012).
As agents of change, APN
entrepreneurs seek opportunities
to directly address gaps in direct
patient care and the healthcare
industry. APN entrepreneurs must
secure top-notch business skills
because they must first convince

23. decision makers and other stake-
holders that their views of a new,
improved way of doing business
via an independent practice offer
clear, data-driven advantages for
patients and real value for the
organization’s bottom line. An
entrepreneurial spirit, solid
knowledge base, clinical skills,
and desire to provide patients
with quality healthcare are simply
not enough to be successful in an
independent practice. The viabili-
ty of nurse-managed practices
essentially rests on keen business
acumen and financial “know-
how” (Barberio, 2010).
To make their case for a new
nurse enterprise, ambitious inde-
pendent APN entrepreneurs look
to the traditional business plan as
the vehicle for defining the what,
why, who, and where of their nas-
cent business venture. For in -
stance, what clinical specialty
reflects the APN’s clinical expert-
ise and services the practice will
provide? Who are the competitors
and what will differentiate APN
practice from the competition?
Where will the practice be located
to assure sufficient volume and
related revenue stream? How
many employees are needed to

24. start the business? How much
money is needed to get started?
What is the potential for getting a
loan? How long will it take to
make a profit? What are the cur-
rent healthcare payer, tax, and
related insurance environments?
How will the new APN practice be
marketed, advertised, and man-
aged? It is in a fully developed
business plan where nurse entre-
preneurs (a) identify specific goals
and measurements to assess
progress over time; (b) establish
the foundation for future practice
performance with detailed finan-
cial analyses that include cash
flow and break-even require-
ments; and (c) leverage critical
industry intelligence and market-
ing information to demonstrate
the proposed venture’s viability
before decision makers agree to
make a significant financial com-
mitment.
The Business Plan Framework
Although business planning
dates to the 1960s (Taylor, 2016),
the essence of business planning
has changed very little. A good
business plan, with an average
length between 10-35 pages, is a
well-written, compelling docu-
ment that explicitly defines the

25. NURSING ECONOMIC$/May-June 2017/Vol. 35/No. 3128
goals of the proposed business
and describes in detail the strate-
gies that will achieve those goals.
Writing a business plan is like
telling a story, one that flows logi-
cally and step-by-step through a
traditional series of key elements
(Sherman, 2016) (see Table 1).
These elements are similar to
those used in evidence-based
practice projects which build on
the recommendations from the
IOM (2001) and focus on “stan-
dardizing healthcare practices to
science and best evidence and
reducing illogical variation in
care, which is known to produce
unpredictable health outcomes”
(Stevens, 2013, para. 7).
From a writing perspective,
business plans must be free of
acronyms or colloquial terms that
may be unfamiliar to diverse read-
ers. The typical plan uses a single-
spaced format, with the refer-
ences, appendices, tables, and
charts included in the body of the
plan.

26. Introduction
The introduction sets the
stage for the entire business plan.
In the first three sentences of the
introduction, the APN entrepre-
neur must capture readers’ inter-
est, and introduces readers to the
author’s area of specialization and
envisioned organization. Next
comes the description, need, and
details of the proposed ambulato-
ry practice; this must create a very
convincing and compelling case
that identifies a significant gap in
patient care. Most importantly,
the introduction concludes by
describing a practical approach
that can close that gap and achieve
important data-driven patient out-
comes.
Description of the Business
This section of a business plan
defines the unique aspects of the
proposed ambulatory clinical prac-
tice that distinguishes the envi-
sioned business from other com-
petitors (Barberio, 2010). Centering
on a unique area of specialization,
discuss how the APN ambulatory
practice competes in the healthcare
marketplace and drives reimburse-
ment – both essential elements for

27. new ventures. Specialization, con-
sidered a wise strategy for new
business owners, reduces competi-
tion and drives compensation –
both essential elements for new
businesses in the highly competi-
tive, consumer-focused healthcare
industry.
This section begins with a
brief but detailed overview of the
APN’s clinical practice history,
including current service profi-
ciency and offerings, existing cus-
tomer base, and economic pro -
spects. A complete description of
the proposed practice’s essence,
evolution, and market follows, as
well as the current healthcare and
practice trends that support the
need for and sustainability of the
new business concept. The sec-
tion summary should include a
broad and comprehensive per-
spective on industry, economic,
regulatory, and competitive trends
that affect the proposed clinical
practice.
Market and Competition Analysis
The challenge of this analysis
requires the APN to present suffi-
cient data to convince potential
investors the proposed clinical

28. practice venture has a substantial
market not only for the envisioned
practice but also in the larger con-
text of the healthcare industry. In
this analysis, target populations
such as pediatrics or adults are
identified, size of the current and
potential markets are described,
and competition that exists in the
market is detailed. The SWOT
assessment is the typical frame-
work for this analysis (see Table 2).
The strength of the SWOT
analysis rests in its analytic frame-
work of strengths, weaknesses,
opportunities, and threats that can
“help your company face its great-
est challenges and find its most
promising new markets” (Fallon,
2016, para. 1). Strengths and
weak nesses are factors internal to
the proposed practice and may
change over time (Fallon, 2016).
Strengths and weaknesses include
Table 1.
Key Elements of a
Business Plan
• Introduction
• Description of the Business
• Market and Competition Analysis
• Development Plan and Schedule
• Operational Plan
• Marketing Plan

29. • Organizational Plan
• Financial Plan
• Executive Summary
Table 2.
Sample SWOT Analysis
Strengths Weaknesses
• Clinically expert APNs
• Location adjacent to target
community
• Clinical specialty has few
competitors
• Aging population limits family
practice opportunities
• Growing hospital system employs
physician practices
• Lack of practice owner experience
Opportunities Threats
• Potential to link with practices
interested in specialty referrals
• Reconfiguration of practice patterns
may enable significant market
penetration
• Growth potential significant based
on absence of alternative options

30. • Aggressive hospital system entry
into marketplace
• Insufficient funding support may
limit immediate practice expansion
• Practice marketing efforts
overshadowed by hospital system
market penetration strategy.
129NURSING ECONOMIC$/May-June 2017/Vol. 35/No. 3
a variety of resources – financial,
physical, and human – as well as
current processes such as employ-
ee programs, department hierar-
chies, and software systems.
In contrast, opportunities and
threats are external to the practice;
these exist in the market and fall
beyond the APN’s control. Exam -
ples include market and economic
trends, funding sources, demo-
graphics, relationships with sup-
pliers and partners, and political,
environmental, and economic reg-
ulations in the category of external
factors (Fallon, 2016).
Each part of the SWOT analy-
sis forces the APN to answer some
critical questions. When consider-
ing strengths, the APN might

31. answer the following questions:
• What is your real strength?
• Are you associated with spe-
cialty physicians for referrals?
• Do you have competent admi -
nistrative and management
personnel?
• Are your personnel trained
and educated in ways that dif-
ferentiate their expertise from
others offering similar servic-
es?
• Is your patient flow paradigm
preferential?
The analysis of weaknesses
might include answers to the fol-
lowing questions:
• What are the weaknesses in
your skills and experience?
• Are there problems in your
facility?
• Do you lack business expert-
ise?
• Does your business have lim-
ited resources?
• Do you lack necessary clinical

32. expertise to expand your prac-
tice?
• Is the management of your
patient flow a problem?
• Do you have an unacceptable
patient wait time?
• Do you have inadequate sup-
plies to meet patient needs?
• Is your business in a poor
location?
Identification of opportunities
can include answering some dif-
ferent types of questions such as:
• Are market trends favorable to
your volume projections?
• Are demographics such as age
or gender favorable to your
practice?
• Is the payer mix in your loca-
tion favorable?
• Can you envision vendor or
supplier collaborations and
associated cost reduction?
• Can you maximize benefit
from economic and financial

33. trends?
In contrast, threats require an -
swers to a different set of questions:
• Are other nearby practices
expanding?
• Have new practices opened in
your area?
• Are accountable care organi-
zations affecting your prac-
tice’s potential development
and growth?
• Are hospital systems aligning
market flow to their practices
and acute care facilities?
• Are there government regula-
tions (such as those focused
on the implementation of
electronic health records) that
are challenges for your pro-
posed practice?
• Are there economic projec-
tions that could negatively
impact the practice you envi-
sion?
• Does a new product or tech-
nology make your services
obsolete?
Describing threats from gov-

34. ernment regulations is an especial-
ly critical part of the risk assess-
ment. In a national survey conduct-
ed by KPMG in 2012, 60% of
healthcare executives said regula-
tory and legislative pressures were
the most significant barriers to
their company’s growth projections
over the next year (KPMG, 2012).
Remem ber the SWOT assess ment
only contributes to the foundation
of a good strategic plan; it is not
the final analysis (Patrishkoff,
2015). As Berry (2016) concluded,
“the true value of this exercise is
in using the results to maximize
the positive influences on your
business and minimize the nega-
tive ones” (p. 3).
Development Plan and Schedule
In this section, the APN entre-
preneur provides the details of the
what, how, and when of develop-
ing the new product or service.
The services that are planned for
the practice are described in pre-
cise detail, including the days and
hours of operation. Using the
development cycle, all the re -
sources needed to develop the
practice are defined, including
equipment, staff, facilities, sup-

35. plies, technology, and finance.
This section also includes details
of the planning, program, and pol-
icy development required for the
new enterprise, including the
plans for building, marketing,
staffing, training, and operating
the practice.
The development plan typi-
cally includes a step-by-step time-
line that details the evolution of
the ambulatory practice from
planning to completion, as well as
an evaluation approach that
assures future funding sources.
This information requires data-
driven metrics and mechanisms
for quality control, continuous
improvement, and risk abatement.
According to Wolters Kluwer
(2012), small businesses typically
face two primary risks: introduc-
ing a product that people will not
buy, or not introducing new prod-
ucts often enough. The first risk
may be reduced by being clear
about the target population and
including sufficient market re -
search at each step of the develop-
ment process. The second risk
may be lessened by analyzing
shifting market conditions and
making a strong commitment to
continued practice development
strategies.

36. Organizational Plan
In this section of the business
plan, the APN provides potential
investors with a thorough view of
the team and organizational rela-
tionships within the proposed
NURSING ECONOMIC$/May-June 2017/Vol. 35/No. 3130
business. This section includes an
organization chart (see Figure 1),
which clearly depicts the hierar-
chical structure of the practice,
defines the chain of command and
lines of direct authority and re -
porting, and linkages with a larger
healthcare system, as appropriate.
The organizational plan also
includes detailed descriptions of
the key team members who will
eventually make the practice a
success. These should include
succinct qualification profiles that
detail key skills, competencies,
and prior experience. Position
descriptions for all key personnel,
along with expected salaries,
should be placed in the plan’s
appendix. The plan should also
identify any external consultants
or independent contractors that

37. may be hired, describing their
unique practice function and con-
tribution (Fontinelle, 2016a). In
addition, the organizational plan
should include a description of
the legal form of ownership that is
planned for the business (sole pro-
prietorship, partnership, limited
liability partners, limited liability
company, or corporation), and a
statement of the company’s man-
agement philosophy, values, and
culture.
Marketing Plan
According to the U.S. Small
Business Administration (SBA)
(2016a), the marketing plan
should ensure “you’re not only
sticking to your schedule, but that
you’re spending your marketing
funds wisely and appropriately”
(para. 1). The plan, suggests the
SBA, includes “everything from
understanding your target market
and your competitive position in
that market, to how you intend to
reach that market (your tactics)
and differentiate yourself from
your competition in order to make
a sale” (para. 2). Consideration
needs to be given to how the prac-
tice will reach potential clients.
Abrams (2015) suggests the

38. entrepreneur consider four fac-
tors:
1. Fit. The chosen marketing
vehicles match the profession-
al image and can reach the
practice’s target customers.
2. Media mix. The plan should
incorporate more than one
media channel to obtain max-
imum exposure, and may in -
clude traditional media (bro -
chures, on-line advertising,
direct or email mailings, and
print or broadcast media) as
well as new media (Facebook,
other websites, social net-
working platforms such as
Twitter).
3. Extent of repetition. Planning
and paying for many expo-
sures to achieve the maximum
media saturation needed.
4. Affordability. Since marketing
requires a substantial budget,
consider where the funds are
best spent.
Beyond these general guide-
lines, it might also be wise to con-
sider some of the tried-and-true
principles of diffusion of innova-

39. tion derived from the seminal
work of Everett Rogers (2003).
Rogers stated five attributes influ-
ence the rate of adoption of any
innovation:
1. Relative advantage. The de -
gree to which an innovation is
perceived as being better than
the idea it supersedes; the
greater the relative advantage
of an innovation, the greater
the rate of its adoption. Rogers
asserted relative advantage
(such as economic profitabili-
ty, low initial cost, decrease in
discomfort, social prestige,
savings of time and effort, or
an immediate reward) is one
of the strongest predictors of
an innovation’s rate of adop-
tion.
2. Compatibility. The degree to
which an innovation is per-
ceived as consistent with the
existing values, past experi-
ences, and needs of potential
adopters. Thus, a nursing in -
novation should revolve around
a core of caring, healing and
holism, dedication to the
well-being of patients and
families, appreciation of the
opportunity to serve others,
focus on comfort, and honor

40. for the human spirit.
3. Complexity. Rogers suggested a
high degree of complexity is a
barrier to adoption; thus, a new
nursing innovation should be
straightforward, simple, and
easy to understand.
Figure 1.
Sample Organization Chart
Practice Manager APNs, RNs,
LPNs
APN Owner
Reception and
Appointment
Personnel
Billing, Accounts
Payable and
Receivable,
Insurance
Personnel
Clinical
Assistants
APNs = advanced practice nurses, LPNs = licensed practical
nurses, RN =
registered nurses

41. 131NURSING ECONOMIC$/May-June 2017/Vol. 35/No. 3
4. Trialability. This is “the de -
gree to which an innovation
may be experimented with on
a limited basis” (p. 258).
Rogers concluded the triala-
bility of an innovation is posi-
tively related to its rate of
adoption.
5. Observability. Defined by Rogers
as “the degree to which the
results of the innovation are
visible to others” (p. 258); the
more easily the results of an
innovation can be seen by oth-
ers, the greater the rate of
adoption.
Another critical feature of the
marketing plan is the evaluation
metric for the success of the mar-
keting initiatives. The SBA calls
this “measuring your spend”
(2016a, para. 7) (monitoring the
effect of specific marketing strate-
gies on revenues during a fixed
period of time as compared to a
previous fixed time period). “The
time spent developing your mar-
keting plan is time well spent
because it defines how you con-
nect with your customers, and
that’s an investment worth mak-
ing” (SBA, 2016a, para. 10).

42. Financial Plan
In this section, the APN will
define the business strategy and
goals of the new practice, identify
payer priorities, and specify what
potential customers value and
need. The financial section of a
business plan does not equate to
traditional accounting (Wasserman,
2016). Although the financial pro-
jections – profit and loss, balance
sheet, and cash flow – look similar
to accounting statements, account-
ing looks back in time, while busi-
ness planning looks forward
(Wasserman, 2016).
A clear understanding of the
proposed business, basic knowl-
edge of financial planning, and
knowledge of financial tools that
measure the performance and suc-
cess of a business enterprise are
essential to writing a business
plan. Additional assistance from a
financial expert may be required
when writing this section. There
are helpful reference texts avail-
able (Abrams, 2015; Baker &
Baker, 2014; Paterson, 2014) and
many on-line resources as well
(Fontinelle, 2016b; SBA, 2016b).
However, many aspiring nurse

43. entrepreneurs opt for hiring a
financial consultant who can
assist them in creating a complete,
concise, and realistic overview of
the proposed business’ financial
future. If the APN elects to secure
a financial consultant, it is impor-
tant to hire an unbiased profes-
sional expert who can assure
accurate and realistic financial
projections. These projections typ-
ically include an income state-
ment, balance sheet, and cash
flow statement with a number of
different analyses.
Income statement. This state-
ment summarizes the revenue and
expenses that are projected for the
proposed business. The income
statement should list all sources of
income, estimate volumes of
patients the practice expects to see
each day and payer mix, deter-
mine expected revenue per unit,
and calculate expected total rev-
enue per year (Paterson, 2014).
Some factors to consider in these
calculations include ambulatory
payment classifications (which
may apply to freestanding prac-
tices such as an ambulatory sur-
gery center not associated with a
hospital), Healthcare Common
Procedure Coding System (HCPCS)
codes, payer fee schedules, per-

44. cent of charges, relative value
units (which are the basis of reim-
bursement in ambulatory care),
and an allowance for bad debt.
For a new start-up business,
the total project expenses are calcu-
lated by examining the strategic
plan, payer mix information, labor
projections for all staff by category
including benefits and overtime,
expected capital costs, and indirect
costs or overhead. Indirect costs,
determined by allocation methods
acceptable to the funding organiza-
tion, recognize the reality all new
services require general resources
such as leasing costs for space, fur-
nishings, technology support, utili-
ties, and administrative or supervi-
sory staff. While the income and
expense statement provides an
estimated organization-wide pool
of indirect expenses, new practices
or businesses demand the con-
struction of de tailed indirect
expenses as well as direct expens-
es. The total of direct and indirect
expenses is then divided by direct
expenses to produce the loading
factor that shows the excess of total
costs over direct costs for the prac-
tice (Paterson, 2014).
Balance sheet. The balance

45. sheet simply shows potential
investors the expected assets of the
new business balance with the pro-
jected liabilities. Obviously, these
figures will be speculative for a
new enterprise although it helps to
benchmark the figures with finan-
cial figures from similar business-
es. Assets may include accounts
receivable, cash, inventory, and
equipment. Liabilities include
accounts payable and loan bal-
ances. An easy way to remember
the balance sheet is that it describes
“what you own vs. what you owe”
(Fontinelle, 2016b, para. 8).
Cash flow statement. This
statement includes analyses that
demonstrate cash flow in a time-
frame. The business plan should
include a cash flow estimate by
month for at least 1 year, and a
longer-term, “pro-forma” projec-
tion of at least 3 years of business
performance. These estimates
might include sales forecasts, cash
versus credit receipts, the predict-
ed time frame for collecting
accounts receivable (Fontinelle,
2016b), and any projected variance
in the budget. It is critical not only
to perform strategic analyses of
budget variances that might be due
to factors such as lower service vol-
ume and higher resource use than

46. expected, but also to identify all
potential management strategies
that could be implemented to min-
imize the budget variances.
Another critical part of the
financial plan is the breakeven
NURSING ECONOMIC$/May-June 2017/Vol. 35/No. 3132
analysis that demonstrates the
point at which the patient volume
and associated reimbursement
may begin to exceed costs and the
practice begins to make a profit.
The operative question to be
answered by this analysis is: At
what operational point has a prac-
tice earned enough revenue to
recoup its costs? At the breakeven
point, the new business makes no
profit but also does not lose
money. The practice has covered
the cost of staying in business and
building volume.
The breakeven analysis in -
volves calculating the total costs
(all fixed, variable/semi-variable,
and opportunity costs), payer mix,
actual revenue per patient, and
actual and projected patient vol-
umes over a 3 to 5-year period.
The figure for actual revenue per

47. patient is multiplied by the
patient volume to obtain total rev-
enue. Along with total expenses,
and current and projected volume
for the next 3 to 5 years, there is
enough information to perform a
simple breakeven analysis that
can demonstrate a profitable prac-
tice over the foreseeable future.
This is a major step in defining the
financial and investment strategy
of the new practice, and convinc-
ing prospective financiers of the
potential profitability of the new
ambulatory clinical practice.
Executive Summary
Written last but placed at the
beginning of the business plan is
the all-important executive sum-
mary. “The executive summary is
often considered the most impor-
tant section of a business plan. This
section briefly tells the reader
where your company is, where you
want to take it, and why your busi-
ness idea will be successful. If you
are seeking financing, the execu-
tive summary is also your first
opportunity to grab a potential
investor’s interest” (SBA, 2016b,
para. 1). In no more than one page
of concise and compelling writing,
the executive summary has two

48. goals: convince potential funders
that the entire business plan is
worth reading and that the pro-
posed business is worth funding.
Some experts warn that new busi-
ness owners should use the upfront
executive summary to tell potential
funders exactly what they want
and to avoid the danger of burying
their needs deep inside the busi-
ness plan (Entrepreneur, 2016).
Choosing what to include in
this critical one-page document is
a challenge because every word
counts. The executive summary
should address every section of
the business plan and, at the very
least, include:
• A brief description of the pro-
posed practice, including a
historical overview that in -
cludes date of formation, com-
pany founders, and projected
number of employees.
• A summary of the mission,
goals, and objectives.
• Solid description of the target
market and the need for the
business.
• High-level justification for the

49. viability of the proposed busi-
ness along with a quick look at
the competition.
3 Projections for 2020 suggest health occupations
in ambulatory care will represent 63% of the
new 4.2 million jobs in health care (Center for
Health Workforce Studies, 2012).
3 Tine Hansen-Turton, CEO of the National
Nursing Centers Consortium, estimated in 2014
there were 500 nurse-led clinics in the United
States and that the number would grow as
healthcare providers look for less costly ways to
provide healthcare (Toner, 2014).
3 According to AAACN (2017), ambulatory care
nursing occurs across the continuum of care in a
variety of settings, which include but are not lim-
ited to hospital-based clinic/centers, solo or
group medical practices, ambulatory surgery and
diagnostic procedure centers, telehealth service
environments, university and community hospi-
tal clinics, military and Veterans Administration
settings, nurse-managed clinics, managed care
organizations, colleges and educational institu-
tions, freestanding community facilities, care
coordination organizations, and patient homes.
Ambulatory care includes those clinical, organi-
zational, and professional activities engaged in
by registered nurses with and for individuals,
groups, and populations who seek assistance
with improving health and/or seek care for
health-related problems.

50. 3 The Patient Protection and Affordable Care Act
(2010) defines a nurse-managed health center as
“a nurse practice arrangement, managed by
advanced practice nurses, that provides primary
care or wellness services to underserved or vul-
nerable populations and that is associated with a
school, college, university or department of nurs-
ing, federally qualified health center, or inde-
pendent nonprofit health or social services
agency” (p. 24).
3 Nurse-managed clinics have proven benefits. In
addition to providing high-quality care with high
levels of patient satisfaction, nurse-led clinics
decrease urgent care visits, emergency room vis-
its, and hospital admissions (Coddington &
Sands, 2008).
Ambulatory Care: The Practice Environment of Growth,
Good Patient Care, and Patient Satisfaction
133NURSING ECONOMIC$/May-June 2017/Vol. 35/No. 3
• Growth and service projec-
tions.
• Marketing strategies: how the
practice will attract patients.
• Financial projections, includ-
ing bank references and invest -
ors.
• Plans that detail the direction

51. of the business development.
(Discover Business, 2016)
Two common pitfalls occur
when writing the executive sum-
mary (Johnson et al., 1988). First, it
is critical to avoid using highly
technical, complicated terminolo-
gy. Writing with simple, easy-to-
understand terms will make it eas-
ier for potential investors to under-
stand the plan. Second, beware of
writing an excessively long execu-
tive summary. Investors read many
proposals and they value a crisp
executive summary that clearly
shows the promise and potential of
the proposed business. Remember,
as with the Introduction, the first
three sentences must capture the
reader’s interest sufficiently to
examine the entire executive sum-
mary and assure equal interest in
reviewing the contents of the full
business plan!
Conclusion
In 2015, Health and Human
Services Secretary Sylvia Burwell
announced the agency’s goal to
shift 50% of payments to value-
based models by 2018 (Rappleye,
2015). “Whether you are a patient,
a provider, a business, a health
plan, or a taxpayer, it is in our com-

52. mon interest to build a healthcare
system that delivers better care,
spends healthcare dollars more
wisely and results in healthier peo-
ple,” Burwell said (Rappleye, 2015,
para. 31). The driving forces that
are motivating to many APNs to
create new, high-value practices
within the ambulatory care setting
reflect the need for better, higher-
quality patient care; a deep com-
mitment to spending healthcare
dollars wisely; and most impor-
tantly, the relentless search for
nursing interventions that lead to
real improvement in the health of
patients. Business planning pro-
vides the path through which new
APN-run ambulatory practices
become a reality and a success. A
well-developed and sophisticated
business plan is an essential first
step in setting up a successful APN
practice that reinforces APNs’ con-
tribution to health care, and leads
to real rewards for patients and
families, advanced practice nurses,
and the healthcare industry. $
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Abrams, R. (2015). Successful business
plans: Secrets & strategies (6th ed.).
Palo Alto, CA: Planning Shop.

53. American Academy of Ambulatory Care
Nursing (AAACN). (2017). Scope &
standards of practice for professional
ambulatory care nursing (9th ed.).
Pitman, NJ: Author.
American Association of Colleges of Nursing
(AACN). (2017). Expanded roles for
advanced practice nurses. Retrieved
from http://www.aacn.nche.edu/media-
relations/fact-sheets/apn-roles
American Association of Colleges of Nursing
(AACN). (2006). The essentials of doc-
toral education for advanced nursing
practice. Retriev ed from http://www.
aacn.nche.edu/ dnp/Essentials.pdf
Baker, J.J., & Baker, R.W. (2014). Health care
finance: Basic tools for non-financial
managers (4th ed.). Burlington, MA:
Jones & Bartlett Learning.
Barberio, J.A. (2010). Establishing an inde-
pendent nurse practitioner practice.
Retrieved from http://nurse-practition
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61. EXECUTIVE INSI
digital innovation is a priority.
That same percentage of leaders at
hospitals with more than 400 beds
are planning to open some form of
innovation center.
Some CEOs have gone further to
tie innovation into culture.
“We intentionally changed
our values or added one more val-
ue—innovation—just to force us to
think differently and act different-
ly,” says Michael Ugwueke, CEO of
Methodist Le Bonheur Healthcare
in Memphis, Tennessee.
Hospitals have some disadvan-
tages when it comes to innovation:
Start with large staffs of doctors and
nurses trained to care for people,
not to create new products. It is a
5 REASONS
INNOVATION
FAILS
What leaders must do first is reset
and retrain. Building an innovative
healthcare organization takes time
and a new look at skills.
By Jim Molpus

62. nnovation isn’t just an industry
buzzword anymore. It’s become an
essential component for hospitals
looking to compete in a more demand-
ing consumer market, and to com-
pete against a sea of entrepreneurs
convinced they know how to fix
healthcare better than hospitals do.
A 2017 American Hospital As-
sociation Survey found that 75%
of hospital leaders surveyed say
healthleadersmedla.com ■ July/August 2018 27
5 Reasons Innovation Fails
“WE INTENTIONALLY CHANGED OUR
VALUES OR ADDED ONE MORE V A L U E -
INNOVATION-JUST TO FORCE US
TO THINK DIFFERENTLY AND ACT
DIFFERENTLY.”
heavily regulated industry. These
tides pull against the ability to
create ideas, build working mod-
els, and fold them into the care
process.
But there are advantages. Hos-
pitals have scale to model solutions
to solve real gaps in care, not just
chase technology that looks cool.
An innovation that comes through

63. the crucible of a major hospital has
applications in provider settings
anywhere.
What leaders must do first is
reset and retrain. Building an
innovative healthcare organiza-
tion takes time and a new look at
skills.
Why your innovations aren’t working
Population health is the ultimate proving ground for
health system innovation. Ever since the first rum-
blings of the Triple Aim began to appear in the liter-
ature, healthcare leaders have discussed, planned,
and executed thousands of initiatives meant to funda-
mentally redesign care delivery from volume to value.
Many succeeded. Most have failed.
So why have so many programs not worked? Were
they just bad ideas? Not necessarily. Many programs
designed to drive quality, reduce cost, and improve the
overall health of the community may have failed for
internal reasons.
In a recent session of the HealthLeaders Media
Population Health Exchange, a panel of leaders in the
diverse clinical, executive, and information technolo-
gy sectors responsible for innovation discussed why
success can sometimes be elusive.
WHY YOUR INNOVATIONS DON’T SUCCEED
Fear of risk
Innovating for the wrong audience

64. Scale is all wrong
You’re a sucker for myths
Poor timing
1. Fear of risk
Hospitals have been inundated
with change for years now. You
might expect that at this point, the
clinical and executive teams would
be skilled at nurturing innovation
and bringing it into workflow. But
there are always barriers, because
with change there is always risk,
and fear of risk is a human reaction
on an organizational scale.
Other factors heighten the fear
of embracing risk: regulatory un-
certainty, softer operating margins,
and pressures to measure every
hospital process.
“You can’t be so risk-averse and
worried about your operational
cash flow that you never take risk,”
says Parinda Khatri, PhD, chief
clinical officer at Cherokee Health
Systems, a comprehensive commu-
nity healthcare organization with
25 sites in East Tennessee. “For us,
frankly, it’s actually much more ex­
pensive not to take risk.”
The leadership team must set

65. innovation as an expectation, she
says. “It’s a paradigm shift. You
must have leadership that says,
‘Sure, go ahead; you don’t get in
trouble here for failing. You get in
trouble for not trying. The status
quo is not acceptable.’ ”
Changing the overall risk
tolerance of the organization is
not a switch that can be turned on
instantly, cautions David Stowers,
RN, PhD, vice president of enter-
prise care management, at four-
hospital Covenant Health Partners
in Lubbock, Texas.
“One of the first things I learned
in this business is no one wants to
change,” Stowers says. “Everybody
likes their own comfortable way
of doing things. So the first thing
we did at Covenant was to set up a
pilot for four different processes,
each with relatively low risk, under-
standing that some may fail. Some
did, and others, like care navigators
in primary care, did not. But the
medical staff at Covenant and the
administration could see that by
2 8 healthleadersmedia.com ■ July/August 2018
putting in small processes, we were

66. impacting little things, and that would
grow to bigger things.”
2. Innovating for the
wrong audience
How often have you come across an
improvement initiative that was sold
as “internal process improvement”
but didn’t turn out to be internal at all?
In the healthcare business, all work
eventually goes downstream to the pa-
tient, and that is where innovation will
be judged.
Monty Duke II, MD, senior vice
president and chief physician execu-
tive of Lancaster (Pennsylvania) Gen-
eral Health, a 663-licensed-bed not-
for-profit health system, says thinking
outside the organization is a challenge
that his leadership team recognized
and took steps to change.
“We had become very insular in
our efforts to innovate by simply keep-
ing it all in the organization,” Duke
says. “We didn’t have partnerships
outside the organization. That is a
must-have to be able to integrate what
other people are thinking.”
The danger was that innovation
would go off in a direction that did not
match the pain points of the patient
base, Duke says. “What are the things
we’re not providing service for now?

67. What is the customer telling us? We
have our physician comments post-
ed online. It’s not so much just about
getting the comments. It’s about un­
derstanding where the opportunities
are out there so that it’s not taking
potential customers and fitting them
into our paradigm, but thinking about
the paradigm that they potentially
would like.”
One essential skill of innovation
is observation, Khatri says. “Apple
didn’t ask people, ‘Do you want an
iPad?’ No. They watched people. So,
we observe. We watch our patients.
We watch our providers and then we
try to think of different ways of doing
things in a very Socratic, experimen-
tal way, with no investment in one
certain way of doing things. We end
up being very solutions-agnostic.”
INNOVATION EVENT
Health system innovators will gather at NEXT Hospital
Innovation in Dallas, October 7-9, to learn how the nation’s
leading systems have brought applications and tools to market,
and gain insights into how to jump-start their own ideas.
Cohosted by Baylor Scott & White Health and HealthLeaders
Media at the new Baylor Scott & White Sports Therapy and
Research facility with presenting sponsor GE Healthcare.
To register for the event, visit store.healthleodersmedia.com/
NEXT18

68. “IT’S A PARADIGM
SHIFT. YOU MUST
HAVE LEADERSHIP
THAT SAYS, ‘SURE, GO
AHEAD; YOU DON’T
GET IN TROUBLE HERE
FOR FAILING. YOU
GET IN TROUBLE FOR
NOT TRYING. THE
STATUS QUO IS NOT
ACCEPTABLE.’ ”
3. Scale is all wrong
Some innovations may meet a cus-
tomer need and be right for the or-
ganization, but might fail because
they were either too small to work
across the organization, or were
rushed to growth too fast.
“Innovation doesn’t all have to
be lightning bolts out of the sky,”
Duke says. The healthcare indus-
try is perhaps “too steeped in the
culture of rolling big things out.”
Instead, Duke says he and the
team at Lancaster have adopted a
“design thinking” approach that
emphasizes small pilots.

69. “You don’t have to innovate
across the organization. You can
do small things. If you fail, you
fail early and cheaply. If it doesn’t
work, you can adapt. I think there’s
a playful element to this too. You
can have some fun and do things
differently. If you can do targeted,
pilot areas, that becomes a lot more
deployable than perfecting it for
the whole institution.”
Mark Wager, president of Her-
itage Medical Systems, an affiliate
of the Heritage Provider Network,
which serves over 1 million pa-
tients in integrated care programs,
healthleadersmedia.com ■ July/August 2018 29
5 Reasons Innovation Fails
ft W s
f
“APPLE DIDN’T ASK
PEOPLE, ‘DO YOU WANT
AN IPAD?’ NO. THEY
WATCHED PEOPLE.
says his organization started a pro-
gram they call “3-3-3” to generate

70. interest in pilot programs.
“At our practice sites, we’ll put
up $3,000 for three weeks if you
have at least three people who want
to talk about something different
that they observe could be done,”
Wagar says. “It’s simple, not real
expensive, and people get excited
about it. There might be 10 pilots
going on, and seven of them miss,
but three of them hit. You applaud
them all. They’re not so large that
they would break any one site’s
performance, but you get people
thinking and active about change.
That helps when you bring a bigger
change to them. They’re used to the
idea of trying something new.”
SO, WE OBSERVE. WE WATCH
OUR PATIENTS. WE WATCH OUR
PROVIDERS AND THEN WE TRY
TO THINK OF DIFFERENT WAYS
OF DOING THINGS IN A VERY
SOCRATIC, EXPERIMENTAL WAY,
WITH NO INVESTMENT IN ONE
CERTAIN WAY OF DOING THINGS.”
4. Sucker for myths
In an industry built largely of scientists who trust only data, a
surprising number of innova-
tions may halt because of myths or other self-generated barriers
to change. One of the most

71. common myths that may kill innovation before it starts is the
proposition that innovation is
destructive, not merely disruptive.
3 0 h e a lth le a d e r s m e d ia .c o m • J u ly /A u g u s t
2018
A leadership team might not in-
novate out of fear that, by doing so,
they might lose a revenue stream,
even one that may have question-
able efficiency or sustainability.
“If the leadership is not willing
to force the business portion of the
organization to adapt to the various
innovations, it won’t move forward,”
says David Battinelli, MD, chief med-
ical officer for Northwell Health, the
largest employer in New York state
with 22 hospitals and 3,900 em-
ployed physicians. “The operating
budget issue is simply an excuse
and a myth used to protect the status
quo. Like the bogeyman, it doesn’t
really exist. Because there are few
examples of how useful innovation
disrupts and harms the operating
budget. That’s a myth that just con­
tinues to get propagated.”
Other myths might simply be
popular misconceptions that are

72. outdated or not supported by data.
“The myth is that the patient will only be satisfied
if they see the doctor. Well, th at’s not true,” Battinelli
says. “They want to get their problem taken care of.
It can be done in 100 different ways. Sometimes, yes,
they do want to see the doctor. If you don’t get past
some of those things, you’re never going to make
advances.”
5. Poor timing, again
There is no such thing as a successful innovation being
ahead of its time. Only when customers, organizations,
or technology are ready for the change will an inno-
vation take hold. But just because a change was tried
earlier and failed doesn’t mean the idea was wrong.
Luis Saldana, MD, chief medical informatics offi-
cer for Arlington, Texas-based Texas Health Resources
(THR), with 24 hospitals and more than 3,800 licensed
beds, says THR tried a program recently to reach out
to emergency department (ED) patients to prevent ED
return visits.
“We applied some resources towards it, but we found
that it was resource-intensive to get the data because they
weren’t just coming to our EDs,” Saldana says. “They’re
going to other EDs, and it was too dif-
ficult to collect that data.”
But what was not as available
just a few short years ago was rel-
atively inexpensive and convenient
access to telehealth. So THR tried
the idea again.

73. “Our ED group took the ini­
tiative to give every patient who
comes to the ED access to a tele-
health visit within seven days,”
Saldana says. “We find out what
the issues are, like why didn’t they
get the prescription filled. Maybe
they could not afford it, so we can
make a substitute. Some didn’t
take advantage. But overall, it
seems to be working very, very well
on reducing patients returning to
the ED.” Cl
Jim M o Ipus is the editor in chief and leadership
programs director for Health Leaders Media. He can be
contacted at [email protected]
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