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Marc Pierson, M.D.: In healthcare, balance local and large

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I am responding to a Boston Globe column by Joan Vennochi  speculating that Partners HealthCare’s two flagship hospitals, Massachusetts General and Brigham and Women’s, might become independent again.

The Vennochi column, headlined “Breaking up is hard to do,”  starts with the sentence:

“GROW OR DIE. It’s the choice facing any business — including the health care business.”

This world view and its associated dynamics are very relevant in the current US healthcare situation.

Another extreme perspective would be, “GET SMALLER OR DIE”. I believe that there are things that scale well and others that fail at scale. Any business in a truly competitive context must consider these things.

They can be understood as the design principles: efficiency and effectiveness.

I hold, not uniquely, that for any institution to flourish in a competitive market it will need to be effective (or its clients will abandon it if they the choice) and efficient—so that their costs are competitive (or its clients will choose the lower-cost alternative with similar benefit).

Value = Benefit/Cost. Effectiveness in this discussion revolves around benefit and efficiency around cost.

In health and health care, effectiveness of service is primarily a local because it is heavily influenced by such local conditions such as the economy, safety, the physical environment, culture, personal preferences, individual choices, and individual and group behaviors. 

But numerous support functions may be suitable for an efficiency focus, such as IT, HR, purchasing, professional training, borrowing and lending, financing, facilities and general management consulting for example.

So there is a big opportunity to develop a franchise  that can support local institutions through the scalable functions at competitive prices. The other side of this proposition is understanding local governance for its ability to support effective health and health services–to meet the needs of specific populations in specific places.

My advice is to:


Balance the small/local/participatory with the large/global/commoditizable.

Whoever fills this niche is going has a winning business model. The others will adapt or be disintermediated–which is very different than dying–they get jobs in the winning institutions.

Marc Pierson, M.D., is a Cambridge Management Group senior adviser, a leader in community- and population-health projects in the Pacific Northwest and a former hospital executive and emergency physician.

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