A view from the Center

Deloitte's Life Sciences & Health Care Blog

Orchestrating a harmonious health care system

Recently my family and I attended a Philadelphia holiday tradition at the Kimmel Center for the Performing Arts—a performance by the largest standalone pops orchestra in America, which also included the POPS Festival Chorus, Philadelphia Boys Choir and a guest appearance of the African Episcopal Church of St. Thomas Gospel Choir.

The acoustics of the Kimmel Center are nothing short of an IMAX movie on steroids, which gives way to goose bumps and holiday magic for two and a half hours. Each instrument in the 70-piece orchestra blended with the chorus in such an incredible way that even the audience sing-along sounded better than Bing Crosby’s best cut of “White Christmas.”

At the center of the stage stood David Charles Abell, a renowned British American conductor who led the group with eye contact, body movements, and his magic wand. All of the amazingly talented individuals performed their role in perfect harmony and true fidelity. All remained in sync with their conductor.

It was hard for me not to drift into thoughts of what it would be like for our health care system if we could create that kind of alignment and harmony. Now that the first year of the marketplaces is nearly over and major provisions of the Affordable Care Act (ACA) mostly implemented, it is obvious that health care delivery systems and health care financing players are making strategic choices to better position their organizations for long-term success.

This has never been more true than in 2014. This year, there were nearly 1,400 transactions across the industry, including mergers, acquisitions, trades, and divestitures.1 The number of accountable care organizations (ACO) reached an all-time high, as 89 new ACOs joined the Medicare Shared Savings program yesterday.2 In the health insurance marketplaces, 25 percent more health plans signed on to offer products in 2015.3 Along with this, the industry saw continued hospital consolidation, new entrants in health care from retail and financial services, Apple Inc. and Google entering the scene with new technology and major pharmaceutical players divesting and swapping assets to focus on specific therapeutic areas.

While many health care executives see that today’s operating model is not likely to work in the future, many are less clear about how to navigate the changes required to be successful. It is much easier to do nothing than it is to make a calculated risk and invest in a new operating model.

We know from business researchers like Michael Porter, Clayton Christensen, and Deloitte’s own Michael Raynor that when the customers’ needs are not met, an industry goes through a period of massive change and disruption. Retail, airlines, banking—these are all good examples of industries that have experienced this restructuring.

Deloitte The Great Consolidation

Restructuring requires great leadership. There are many strong leaders in health care, but health care could benefit from leaders that orchestrate the various instruments of the financing and delivery system to work together harmoniously. We have a complex regulatory maze but that isn’t helping align each of the pieces and players. Today, market leaders make moves without the benefit of an industry vision, a roadmap or even a hint of what is to come.

Leadership can help align the customers, patients, health care providers, suppliers, life sciences, and health plans so each fits together like a system, focused on cost, quality and service. This would be magic.

The question is, who can provide that leadership? Maestro, please!

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Sources:
1 FactSet Research Systems, Inc.
2CMS, “Medicare Shared Savings Program Accountable Care Organizations,”http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/Downloads/MSSP-ACOs-2015-Starters.pdf
3 HHS, “Health plan choice and premiums in the 2015 health insurance marketplace,” December 4, 2014, http://aspe.hhs.gov/health/reports/2015/premiumreport/healthpremium2015.pdf

 

Author bio

Bill Copeland, Vice Chairman of Deloitte LLP, is a 27-year Deloitte veteran and leads the US Life Sciences & Health Care Practice. Previously, Bill was practice leader for the health reform initiative, focused on serving clients’ needs around the incredible changes resulting from the Affordable Care Act. He was also National Managing Director of our Life Sciences & Health Care Industry Consulting Practice and managed the Health Plans Consulting Practice.