Harvard’s Healthcare Strategy cohort wrapped up this week. The application of Michael Porter’s Five Forces Model kept the course focused on how strategy helps providers and other healthcare stakeholders deliver and capture compelling value. It also illuminated the importance of business and care delivery models as enablers of competitive strategy.
Two important reimbursement and care delivery models covered in the course are Capitated Reimbursements and Centers of Excellence (COE). Capitation models pay providers in advance a fixed yearly amount per patient regardless of care utilization. Patients who underutilize care generate profits, while sick patients with high utilization generate losses. Quality standards prevent providers from underserving patients. These dynamics create incentives for providers to focus on patient-specific care and prevention to keep members healthy and out of the hospital. Oak Street Health was selected to illustrate this model.
Centers of Excellence are based on “specialized programs within healthcare institutions which supply exceptionally high concentrations of expertise and related resources centered on particular medical areas and delivered in a comprehensive, interdisciplinary fashion[i].” Most focus on specific practice areas including heart disease, oncology, orthopedics, fertility services, and kidney disease. COEs from innovative providers like Geisinger have successfully attracted large employers including Walmart, Boeing, Lowe’s, and General Electric.
Capitation models and Centers of Excellence are ideal subjects for digital transformation through the application of innovative technologies. For example, our work with Biobeat’s cuffless cardiovascular sensors and intelligent systems helped us develop care delivery models that equip clinicians with timely, comprehensive, and actionable patient information. They make possible financially sustainable precision, preventive, and patient-specific clinical care through advanced health profiling and continuous noninvasive monitoring.
Innovative business and care delivery models fueled by breakthrough clinical technologies are transforming healthcare. Biobeat’s continuous patient monitoring and triage, for example, are helping clinicians around the world prioritize resources to innovate, expand, and improve care delivery. They also reduce bureaucratic overheads and increase efficiencies by automatically updating patient electronic health records (EHR) in real time. In this context, insights from Harvard’s cohort will help us refine our innovative models to deliver more compelling value to our clients. Contact me for more information: email@example.com.
Dr. Leemore S Dafny and Healthcare Strategy course content, HBS Online, Strategy for Health Care Delivery - Health Care - Programs - Executive Education - Harvard Business School (hbs.edu)
Michael E Porter image courtesy of Flickr, https://www.flickr.com/photos/worldeconomicforum/5397052359, via CC-BY-NC-SA 2.0 DEED
Clayton Christens image courtesy of Flickr, https://www.flickr.com/photos/betsyweber/6276847468, via CC BY 2.0 DEED
References [i] Elrod JK, Fortenberry JL Jr. Centers of excellence in healthcare institutions: what they are and how to assemble them. BMC Health Serv Res. 2017 Jul 11;17(Suppl 1):425. doi: 10.1186/s12913-017-2340-y. PMID: 28722562; PMCID: PMC5516836, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5516836/