This week, Kathy Gersch, my Kotter International colleague, highlights four companies in the health care sector that are not waiting for a Supreme Court decision to transform their businesses.
The Supreme Court is set to rule on key provisions of the Affordable Care Act before the end of this month. With so much uncertainty around the future of the U.S. health care system, many companies have long been frozen, taking a “wait-and-see” approach to change, choosing to sit tight until the future becomes clearer.
But in a rapidly changing world, sitting tight can spell disaster.
“A leader of a large health care organization’s challenge is to play offense, not defense,” John Kotter wrote on this blog last summer. “If I were running a hospital… I would be focused on how do we make some significant change to take advantage of the opportunities that are going to be inevitable with this swirling, difficult, changing environment in health care.”
John is exactly right. And in the last few weeks alone, a number of hospitals and other health care providers have heeded his call and are taking drastic action.
The New York Times recently profiled one hospital in Brooklyn, New York — Maimonides Medical Center — whose leaders echoed John’s sentiments: “Win, lose or draw in court, administrators said, the policies driving the federal health care law are already embedded in big cuts and new payment formulas that hospitals ignore at their peril. And even if the law is repealed after the next election, the economic pressure to care differently for more people at lower cost is irreversible.”
With “value-based purchasing” programs mandated by the Affordable Care Act, where hospitals will be judged based on both cost and quality of care, Maimonides is taking major steps to boost patient satisfaction. As the Times reported, Maimonides “asked labor-management teams in every unit to invent their own improvement projects. In one initiative, nurses are making hourly rounds to offer patients extra help.” The hospital also provides valet parking and free Wi-Fi — certainly not business as usual.
Elsewhere in New York City, two of the largest hospital systems — NYU Langone Medical Center and Continuum Health Partners — are joining forces to boost their bargaining power with insurance providers and to cut costs, partly as a result of efficiency mandates outlined in the health care reform bill. Again, this is an example of medical organizations taking matters into their own hands and transforming the dynamics of the health care system, rather than allowing change to simply happen to them.
Insurance companies are also changing. As Aetna CEO Mark Bertolini explained to the Wall Street Journal last week, “If the Affordable Care Act were to go away tomorrow, we still would be better off as an organization, because who can argue with getting a lower health care delivery cost, more streamlined administrative structure, making yourself simpler and less complex to do business with? If that all happened and then health care reform went away, we would be better off and so would our customers.”
The leaders of UnitedHealthcare seem to agree. They made news recently when they pledged to keep popular coverage provisions mandated by the Affordable Care Act in place, regardless of the Supreme Court’s decision. The company said it would continue offering policyholders no-copayment preventative services, and third-party appeals for cases where treatments are denied. They also vowed, among other things, not to cancel policies retroactively, except when fraud had taken place. These are marked shifts in the way insurance companies typically operate.
In each of these examples, leaders are refusing to let complacency set in. They are not resting on their laurels, being myopic or tricking themselves into thinking that the old way of doing things will suffice in the future. The world is changing quickly, and those who fail to change with it are sure to be left behind. The winners will be in front of the transformation instead of behind the curve trying to catch up when things become “clear”. One thing is certain – change in healthcare will continue, and it’s accelerating. There is no point of perfect clarity.
Kathy Gersch is an Executive Vice President at Kotter International, a firm that helps leaders accelerate strategy implementation in their organizations.