Rethinking the Hospital - Value of business models for hospitals

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Master thesis presentation of Maarten den Braber about the value of business model theory for hospitals

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Rethinking the Hospital - Value of business models for hospitals

  1. Rethinking the hospital The value of business models for hospitals Master thesis Maarten den Braber (m@mdbraber.com)
  2. What is this presentation about? • Strategy • Hospitals • Value • Business model Business model Customer! Value! Market! Strategic! Value! Competitive! Cost /! Value ! preferences ! proposition! segment! position! chain! strategy! revenue! delivered ! value! value! implementation! creation! appropriation!
  3. Question: what is important for you?
  4. Running a hospital is a balancing act 4
  5. Demand-side demographics disease patterns public expectations Pressures are rising Supply-side knowledge workforce Societal financial pressures internationalization global R&D
  6. Zero-sum competition • No value is created • Competition is about shifting costs, increasing bargaining power and competition to capture patients • Escaping through value-based strategy Porter & Teisberg (2006)
  7. Reactive behavior is not enough
  8. Field research: 11 interviews - 2 sessions
  9. • Specialized medical care considered core business • Decisions often supply-driven • Scale and scope important decision criteria • Governance structure complicated • What are reasons for success and failure? What issues? 5 examples
  10. Current literature: boxed solutions • Darzi (2007) • MacKinnon (2002) • McKee & Healy (2002) • NVZ vereniging van ziekenhuizen (2000)
  11. Darzi as example: 6 boxed solutions
  12. But “one size does not fit all”
  13. How to build your specific hospital?
  14. Strategy helps determine direction
  15. Value-based strategy?
  16. Value is defined by attributes • Viewed from the customer perspective • Spans the complete process • Delivered through a sustainable process
  17. Value-based strategy requires balance
  18. Outside-in: customer preferences
  19. Inside-out: organizational preferences
  20. Models help solving complex problems
  21. Business model Customer! Value! Market! Strategic! Value! Competitive! Cost /! Value ! preferences ! proposition! segment! position! chain! strategy! revenue! delivered ! value! value! implementation! creation! appropriation! Business model: build strategy • Comprehensive • Coherent • Structured
  22. Value! Market! Strategic! Value! Competitive! Cost /! proposition! segment! position! chain! strategy! revenue! Value proposition: core functions • What (and for who), where, how and when? • What are your core functions? Curing sick people or keeping people healthy? • Who are your stakeholders? Patients, family, physicians, nurses, insurers, ... • Who is your customer?
  23. ! Current value proposition: different?
  24. Value! Market! Strategic! Value! Competitive! Cost /! proposition! segment! position! chain! strategy! revenue! Market segment: define potential • Who and how many? • What defines your market? Geographic region, specific illnesses? • What is your market potential? Market size, share, volume, growth, ...
  25. Value! Market! Strategic! Value! Competitive! Cost /! proposition! segment! position! chain! strategy! revenue! Strategic position: link with environment • What is inside and what is outside? • What is our position in the value chain? Who comes before, who comes after? • How do we balance scale and scope? Compete, collaborate, collaborate to compete? • What is our governance structure? Who runs the organization, what are the dependencies?
  26. Health care value chain
  27. Value! Market! Strategic! Value! Competitive! Cost /! proposition! segment! position! chain! strategy! revenue! Value chain: exchanging value • How to structure processes? • Link value exchanges to the core functions Does the exchange add real value? • Optimize the value chain Lean management,TQM, Six Sigma...
  28. Value! Market! Strategic! Value! Competitive! Cost /! proposition! segment! position! chain! strategy! revenue! Competitive strategy: stay ahead • What is your advantage? • Tools and techniques already available PESTEL, SWOT, 5 forces, ... • Non-profits need competitive strategy Just as for-profits organizations do • Current: quality is medical-technical quality What other types of quality are possible?
  29. Quality can be many different things
  30. Value! Market! Strategic! Value! Competitive! Cost /! proposition! segment! position! chain! strategy! revenue! Cost structure / revenue potential • Make your activities sustainable • Cost and revenue mean more than accountability Investment needs, projections, variable/fixed costs, ... • Balance your service portfolio Profit centers versus cost centers • Tools: do not reinvent the wheel BCG matrix, GE matrix, ...
  31. Business model: strategy building tool Comprehensive. Coherent. Structured.
  32. Business model and the hospital • Does it fit? (suitability) • Will it work? (feasibility) • Will it be used? (acceptability)
  33. Suitability: does it fit? • Makes decision-makers smarter • Aligns with organizational specifics • Makes knowledgeable about succes and failure • Possible to test current and analyze new scenarios
  34. Feasibility: will it work? • Not easy moving away from established policies • Business model helps building and connecting logic • Many tools available already that can help • Strategic mindset in the whole organization is needed
  35. Acceptability: will it be used? • Again: not easy moving away from established policies • There is willingness to change • Inclusive ways are an addition to current methods • Business model reduces complexity
  36. Conclusions about the business model • Business model makes decision makers smarter • Comprehensive. Coherent. Structured. • Aligns well with the organization • Needs effort and time to be implemented • Delivers value... for customer and organization
  37. Remember this?
  38. With the right tools
  39. We can build this!
  40. ! And now...

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