Self-Disruption and Humility: Meta-Event Buzz from 2020 J.P. Morgan Healthcare Conference

We’re fresh off a week in San Francisco at the annual JP Morgan Healthcare Conference.

And, like most of the 50,000 healthcare executives in town, we never set foot in the Westin for the actual conference. Instead, we spent 16-hour days traversing the hills of San Francisco to meet with those who are otherwise busy delivering superior healthcare, disrupting an antiquated model or financing and advising those in either of the former groups. It was exhilarating (and, yes, exhausting) to break bread with some of the brightest minds in healthcare.

In nearly every conversation, we asked healthcare executives the same question:

In 2020, what’s one offensive move health systems and providers should make and what’s one defensive move they must make given the headwinds and call for transformation in the industry?

Their feedback grouped nicely into a handful of themes: taking cost out of the system, focusing on the consumer experience, forging smart partnerships upstream and down and scale, scale, scale.

But there was one answer that stuck with us. “Humility will win the day.” This person – a seasoned adviser and board member of one of the nation’s largest health systems – told us that if there’s a sea change, it’s the recognition by health system leaders that they cannot and do not have the answers to “fix” what’s broken in our healthcare system. Nonetheless, they have a great responsibility to act – humbly, fervently in partnership with others.

In fact, no matter who we spoke with, the ideas we heard revealed energy and commitment to taking action. Healthcare leaders recognize they cannot sit back and rely on their organization’s historical position within their community or within the industry to carry them through the transformation that is and needs to take place.

There was even a growing awareness by some (though not all) healthcare insiders that the attitude towards hospitals has changed: What once was a protected class now has a target squarely on its back. From regulators, politicians, media, payers, unions, even patients. It’s a tension and uncertainty that would be unfair to ignore.

And for many leaders, that tension is a motivating catalyst to make things better – a better patient experience, creative partnerships with sometimes strange bedfellows, aligning with and for physicians, investing more to innovate. Here’s a breakdown of what we heard…

The race for patient loyalty

Above all, providers everywhere recognize that offensively or defensively, they must deliver an exceptional patient experience to win (or maintain) the loyalty of those they serve. And it’s never been harder with so many new entrants seeking to carve out a niche, creating a stickier option for patients looking for faster, cheaper, more convenient experience.

The focus is in two areas: patient access and digital tools. Often, those overlap in an attempt to provide convenient, personal access to care in the way that mirrors the experience provided by other industries like retail and hospitality. Walmart and Amazon understand the customer experience – which includes the ability to collect, process and use data about individuals and populations – and how to deliver an efficient customer interaction every time.

What they said:

Health systems better be thinking about building loyalty through their digital front door – especially when Walmart is gunning to build a primary care clinic in the parking lot of every superstore across the country. They’ll be offering a primary care visit for $10, while Amazon Prime will soon include virtual physician visits as part of its annual membership.

We must think about digital as a new asset class, especially at the board level. Look at examples outside of healthcare, like Domino’s, Walmart, Home Depot – their investment in digital has boosted their overall value in meaningful ways.

We have to focus on improving the patient experience, especially with younger consumers who are savvier shoppers.  They will demand an efficient, digitally-based experience.  If we don’t give it to them, someone else will.

Our system has 10 hospitals – nine of them are brick and mortar and one is virtual, a program to provide hospital-level care in the home.

Taking cost out of the system

It’s a categorically defensive move. We all know healthcare is too expensive. Healthcare spending rose 4.6% in 2018. The pricing of services – and the cost to deliver them – has everyone frustrated, while administration and overhead is eating into margins and must be streamlined.

What they said:

We must find ways to trim overhead and administrative costs to run a more efficient business, especially when you see things like Optum now taking on the management of significant health systems, as it has done with John Muir Health.

We have to take the cost out of the traditional system. It’s no longer a long-term priority.

Healthcare leaders have got to be okay with some uncomfortable conversations in rethinking how the business of healthcare has to change.

Scaling and Creative Partnerships

Growth doesn’t always mean getting bigger, adding facilities and beds. It’s diversifying revenue and finding the right partners to offer services and expertise that established providers can benefit from but shouldn’t necessarily build in-house. Tara Bannow went into some depth on this point in her coverage of the event.

Of course, sometimes growth does mean getting bigger. Advocate Aurora for example announced at the conference a desire to double its revenue by 2025.  We expect to see M&A and PE activity (especially in areas like physician practice rollups) to continue apace in 2020.

What they said:

Physician practice companies must continue to grow and gain scale. Size will be important to have any credibility with payers, to leverage costs and to become more efficient.

Partnerships – large and small – will be critical. Health systems need to be thinking about how to form smart partnerships with “disruptors” while at the same time partnering with those in their community who can help them take a broader approach to the social determinants of health (e.g. churches, schools, etc.).

We must self-disrupt or risk losing control of our destiny. We can do this by investing in innovative companies and technologies that make us better, smarter and faster for our patients.

If it’s possible to distill everything we heard throughout the week, that last quote gets close. Again:

“We must self-disrupt or risk losing control of our destiny. We can do this by investing in innovative companies and technologies that make us better, smarter and faster for our patients.”

There is an imperative to shake things up, and those that don’t risk obsolescence.

Fortunately, many organizations are disrupting themselves. They are investing time, resources, and expertise to becoming “better, smarter and faster for patients.” We saw leaders who don’t have all the answers (because who does have all the answers?) and, in response, are finding the right partners and testing out new tools to figure it out. It’s going to be a busy year.

Jarrard Inc.
ourthinking@jarrardinc.com