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Five strategic challenges—and solutions—for healthcare in 2023

December 05, 2022
Business Affairs
Rich Miller
By Rich Miller

For over a decade, healthcare systems have looked to mergers, acquisitions, consolidation, and diversification of services to ‘scale up’ operations. The aim is to achieve greater productivity and quality while simultaneously reducing costs. Unfortunately, for far too many health systems, these benefits have simply not materialized; in many cases, each of these measures has deteriorated. These challenges will persist until new methodologies and enterprise infrastructure are adopted to build high-functioning operating units and care settings that take full advantage of their talented and dedicated provider workforce.

Still, with the right approach, consolidation can yield an integrated health system that uses its diversity to enable care excellence. The key to doing so is to recognize that provider operations are the tool needed to execute health system consolidation—not the other way around.

With that idea in mind, here are five significant, strategic challenges the healthcare industry will face in 2023, along with some best practices for addressing each:

Challenge #1: Learn how to integrate, not just consolidate
The ongoing march toward consolidation has created a vast sea change around what healthcare organizations look like. Typically, health systems grow to try to improve care quality, productivity/access, and economies of scale. So, why does consolidation often result in the exact opposite of the intended consequences?

The answer is deceptively simple: Consolidation requires the integration of provider processes, and sufficient investment in tools to accomplish that task.

Overcoming this obstacle has as much to do with mindset as with practical tools. Most growing health systems try to “get through the consolidation” before turning their attention to their provider operations—but this approach has the tail wagging the dog. When health systems instead focus on coordinating, harmonizing, and integrating their provider operations, they often find that the resulting workflows solve many of their consolidation conundrums.

That’s because operational integration allows health systems to funnel individual providers to the moments of patient care where they can make the best and most efficient impact within the larger, consolidated network of care.

Challenge #2: Achieve economies of scale
Increasing efficiency and reducing costs while improving care quality will remain a sizable effort in the coming year. One way to do all three is to create clinical Centers of Excellence that let health systems scale up care quality and productivity while decreasing unit costs. It’s about centralizing certain services to reduce variability, which is costly to both clinical outcomes and financial operations.

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