In this BDC Working Paper, Dave Anderson, PhD highlights the challenges hospitals face in a consumer-driven ambulatory care market. He recommends new business strategies to improve quality, lower cost of care, and earn greater financial returns.
Health systems risk losing the early advantage they have had in the rapidly growing ambulatory health care market. They face serious competition from focused, venture-backed companies and insurers who are entering the ambulatory market at scale. There are several obstacles health systems face in their battle to continue building ambulatory care:
Their traditional commitment to inpatient care
Fundamental differences in ambulatory and inpatient markets
Dynamic entrepreneurship and growing access to capital by independent ambulatory providers
Succeeding in ambulatory markets will require health systems to break the chains tying their inpatient and ambulatory activities together. Key steps health systems can take are to:
Reorganize ambulatory services to give them greater stature and access to resources;
Enhance the ambulatory consumer experience
Develop rigorous product costing and pricing models
Take consumer marketing to a new level
Develop a culture that supports and expects innovation
Strengthen business development capabilities
The ambulatory care market has become an entrepreneurial world full of partnerships, joint ventures and alliances. In order to succeed in this market, health systems will need to recruit ambulatory leaders who are themselves entrepreneurs. While pursuing ambulatory business for its own sake could increase market fragmentation, as long as ambulatory markets are competitive, this strategy could produce improved quality, lower cost of care, and greater financial returns.
David G. Anderson, PhD
Senior Advisor
Boston and San Francisco 925-352-9462 dave.anderson@bdcadvisors.com
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