In “Healthcare Leadership Check Up,” Oliver Wyman’s leadership and development experts identify what lessons healthcare can learn from companies that have already gone through the transformation experience. Among them: Create structures that give the new model room to move. Make sure you have the right skill set on board. Consciously create the new culture. And make sure the CEO personally leads the charge.
Two Models—One Big Problem
Both healthcare delivery systems and payers are finding themselves increasingly forced to work with what we call “dual model” approaches because what drives success in a value-based world does not under fee-for service.
The economic levers – volume vs value, for example – and the keys to success – a provider-centric vs patient-centric focus to name one – are completely different and therefore require you to operate two parallel organizations. For a delivery system, this may mean developing an accountable care organization or value-based delivery for a segment of its patient population, to run (at least temporarily) alongside an existing hospital or care network. For health plans, most are facing the likelihood that over the next few years their business may switch from being primarily wholesale (insurance sold to employers on behalf of employees) to retail (employees and other consumers making purchase decisions for themselves). In each of these cases, there is some variant on a theme: The organization must incubate, launch, and grow a new business or operating model while sustaining the legacy model for some period of time.
Dual model businesses present inherent tensions – if not conflicts – that have to be managed.
- Top talent often sees the “latest” opportunity as more desirable and interesting than running the day-to-day.
- The organization as a whole will be watching carefully to see how deeply invested senior leaders are in the new model. If the answer is “not much,” they’re likely to act accordingly.
- Support and operations functions may have difficulty responding to the new, rapidly emerging requirements and prioritizing new versus legacy demands.
- And the “startup” organization or business is likely to be much less predictable and require a greater capacity for quick course-corrections.
Running parallel operations, at different levels of maturity and with different operating rules, calls for C-suite leaders to recalibrate their oversight approach and, often, to increase their level of involvement.
