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Michael Porter

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Successful medicine is now all about teams

Harvard Business School Prof. Michael Porter writes in a NEJM Catalyst piece headlined “What 21st Century Health Care Should Learn From 20th Century Business”:

“{The} variability in patients will always persist, but what has disappeared is the ability of any individual physician to deliver excellent care on his/her own. In today’s sophisticated medicine, the patient needs a team. The ability to personalize care lies in the ability of experienced groups of clinicians working together in treating patients with similar conditions to understand how to deal with individual differences. An IPU {Integrated Practice Unit} team is far better equipped to deal with exceptional cases and deliver personalized care than the traditional model — just as SBUs {Strategic Business Units} were better able to respond to their customer needs for their product than traditional functional structures. Health care needs real teams and real IPUs that are dedicated to meeting the needs of particular groups of patients, with the same focus that SBUs allow in meeting the needs of their customers for their product.”

To read the piece, please hit this link.

Oak Street Health’s compelling economics


Harvard Business School’s Michael Porter, a big fan of bundled payments, praises the work of  the Chicago area primary-care provider  Oak Street Health.

Here’s how Paul Barr describes it in Hospitals & Health Networks:  “Oak Street receives a risk-adjusted global capitation payment from CMS-hired insurers for seniors with low income, basically the senior dual-eligible population.

“That payment is designed to cover everything. ‘We are at risk for all of the care,’ says Griffin Myers, founder and CMO of Oak Street. “That’s not just primary care. If somebody ends up in the hospital, we pay the hospital bill; if they end up in a specialist’s office we pay the specialist; if they end up in a rehab, we pay the rehab,’ Dr. Myers says.”

“But Oak Street Health provides a cranked-up version of primary care at a cost that is roughly triple the annual amount spent on primary care with the average Medicare patient, but far cheaper than inpatient care, Dr. Myers says.

“The economics are compelling: If Oak Street’s primary-care efforts are good enough to reduce inpatient admissions sufficiently, the patients are healthier and Oak Street harnesses the savings. Myers estimates that the average cost of a hospitalization for seniors of about $13,000 equals the cost of about 100 clinic visits. Under that scenario, if they can prevent a single hospitalization as the result of 90 primary-care visits, they’ve saved money, he says.”

Hit this link for the whole H&HN article.

Porter’s strategic pointers


Famed Harvard Business School Prof. Michael Porter’s approach to organizational strategy has been transformative for many companies.

Mr. Porter has recently turned to the healthcare, business co-authoring a book, Redefining Healthcare, with Elizabeth Teisberg, as well as writing on the topic in the Harvard Business Review, the New England Journal of Medicine and the Journal of the American Medical Association.

Among his ideas for successful strategies, reports Hospitals & Health Networks:

“Strategies explain how an organization will create unique value.”

“Market structure determines profitability and shapes strategies.”

“Successful organizations compete to be different, not to be the best.”

“The essence of strategy is choosing what not to do.”

“Being different requires doing different.”

“There are generic strategies that have broad, universal application.”

“Strategic success requires fit and continuity.”

Clusters can support competitive advantage.”


Common sense and buzz words for sale

Scott Becker, in Becker’s Hospital Review, translates  the ideas of Harvard Business School Prof. Michael Porter and Thomas Lee in looking at how to succeed in healthcare in the next couple of years as including:

* Building a  dominant healthcare system for maximum pricing power.
*  Applying the ”80/20 rule” to most opportunities, talent, revenues and cost areas. The rule basically means mean that 80 percent of your outcomes come from 20 percent of your inputs.
* Testing new areas but doubling down on winners.
*  Embracing ownership of physician practices.

Of course, some of these ideas are recycled banalities — or just sense for sale at very high hourly rates.



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