|Hospitals Must Focus on Scale to Combat New Competitors|
hospitals are struggling to hold onto their outpatient business in the face of
new competitors that have the scope and technological capability never before
seen in healthcare.
and CVS Health/Aetna are aiming to unbolt outpatient business from legacy
hospitals. Amazon, Apple and Google are investing heavily in healthcare from
numerous angles, looking for the most effective entry points to care and
services. Hospital organizations are doing what any company would do when
confronted with a highly disruptive environment like this: They are trying to
gain the financial and intellectual resources to compete in a new world.
are making this transition in the face of a difficult financial reality.
Moody’s Outlook for 2019 projected that revenue growth for hospitals would continue
to decline under pressure from weak inpatient volume and low reimbursement
payments. At the same time, expenses would continue to grow faster than
revenue. In this situation, the normal response of any company in any industry
would be to seek scale in an effort to meet this new level of competition and
adjust to a emerging business model. That is exactly what is happening among
hospital stakeholders. “Bulking up” is a logical response.
need to grow along with everyone else. Scale will help ensure that America’s
hospitals can keep pace—that they can continue to build on their deep community
connections, expertise treating the full range of health conditions and history
of serving our most vulnerable populations.
will be critical, but it is not an end in itself. Scale is a means to gain
intelligence—to get the best intellectual capital, to tap information about a
vast group of people, to test new ideas and then to scale those ideas.
Nevertheless, scale is the platform that will allow hospitals to acquire the
resources—such as more working and intellectual capital, and significant
digital capabilities—to compete in this brand new healthcare marketplace.
—Adapted from "Why
Hospitals Must Seek Scale," by Kenneth Kaufman, KaufmanHall.com, Dec. 20, 2018.