Service-line Strategies For Hospitals and Other Service Providers

The August issue of the McKinsey Quarterly discusses service-line strategies for US hospitals. This article is well worth reading, also for hospital management in other countries, as well as management of other types of services businesses. And take action upon it!

In the US is the full-service general hospital still quite common. On average it has some 160 staffed beds. These hospitals share common problems:

  • They have an immense clinical complexity.
  • It is difficult to create a performance transparency on Key Performance Indicators (KPI) like quality, service, and costs.
  • The competition is growing fast.

The generic strategic answer for implementing this business transformation is specialization. However, it is not so simple to move from a full-service hospital to a few specialized service-lines. It is more than introducing the new word "specialization".

The 1st step is where are you going to compete, and with what. That means you must be very well aware of your current position, including patient and referrer satisfaction. You want to keep them as loyal as possible. Also, you want to have some idea of your growth potential, because that is why you want to undertake this major change program. It should result in a clear picture of your Ist and Soll situation.

If you are satisfied with the outcome of your new positioning then it is time to define step 2, your transition program. Among others, you will need to change your organization, processes, and IT. You will have to change your decision process, and your capabilities. You want to manage this transformation carefully. And you will want to keep your employees as satisfied as possible, because you will need them badly.

Such a business transformation has a major impact. And it is well worth the trouble. But nothing for nothing! I think the American health care is not so different from that in other countries. In the Netherlands, for instance, the hospitals are bit larger, and usually they are in some way integrated with other types of health care businesses. The principles though are the same, and also the approach.

One more remark on other services business. The discussed principles and steps in this blog apply to them as well. Whether you are in banking, insurance, or government, the way to go forward is the same!

How to discover you your new positioning? And how are you implementing your business transformation? Please share your successes and your improvement points. We all want to learn from each other! Thank you!

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