Service Business Model Innovation, an overview of our recently published book chapter

We are proud to announce the publication of Service Business Model Innovation in Healthcare and Hospital Management by Springer. The book includes process innovations and toolkits that can be used to improve value generation and build competitive business architectures in the health care sector.

M2 authors contributed a chapter entitled “Essential Characteristics of Service Business Model Innovation in Healthcare: A Case-Study Approach.” The chapter highlights examples of successful service business model innovation at four different U.S. health systems, based on interviews with leaders from each institution. The next few blog posts will highlight key learnings from the case studies we wrote about Baylor Scott & White Health’s collaboration with The Cleveland Clinic, BJC HealthCare and the BJC Collaborative, the Massachusetts General Physician Organization, and Sutter Health and the Sutter Medical Network.*

Why did we write these cases?
In my work with clients, and as a lecturer for graduate students in public health, I have been given access to two unique viewpoints into the U.S. health care system, and in my opinion, each set of observers need to know more about the other. My clients are often grappling with creating health care system change, but don’t have a roadmap – they often have to create models from scratch. Graduate students, who are often academic learners and professionals in their field, are taught theoretical models or frameworks, but don’t have a good sense of how theory translates into practice.

In addition, the system of delivering and paying for health care in the U.S. is undergoing seismic changes. Some of this change is driven by federal, state and local governments, who pay for about half of all U.S. care, and some of the change is driven by innovation created by the marketplace. Health care organizations that have succeeded in creating service business model innovation in the new world of accountable care, integrated delivery, shared-savings, and value-based approaches have certain characteristics in common.

Based on the case studies we wrote, which represent a range of U.S. geographies, provider types, and collaborative arrangements, we found service business model innovation rests on the pillars of trust, leadership, and cooperation.

Why is innovation needed now?
The health care system is undergoing massive change, no doubt. But why is innovation needed now?

Thomas Robertson, the Executive Vice President of Member Relations and Insights for the University HealthSystem Consortium, an alliance of nonprofit academic medical centers and their affiliated hospitals, wrote in an opinion piece for Academic Medicine in 2015:

“Seemingly lost in the race to manage everything everywhere is the recognition that a very small subset of very sick patients account for the vast majority of health care spending. Any programs, prospective payment systems, or policies designed to curb health care spending must focus on improving the efficiency of complex episodes of care delivered to the sickest subset of the population. Whether a population is defined as a company, a county, or a country, the overwhelming majority of its health care spending comes from a small minority of the individuals, and the bulk of that spending is associated with either largely unavoidable and unpredictable single events or complex episodes of care. Achieving an economically sustainable health care system will require more efficient and effective delivery of those complex episodes of care.”

More efficient and effective delivery of complex care, however, requires a diverse set of providers to work together – which is not how the current system was built, nor is it how most payers reimburse health care practitioners for providing care. In these contexts, a health organization must trust its partners more than ever before.

Our chapter, “Essential Characteristics of Service Business Model Innovation in Healthcare: A Case-Study Approach”, provides a roadmap of the various ways organizations are meeting the challenge to efficiently and effectively deliver complex care by using the key skills of trust, leadership, and cooperation to create service business model innovation in the U.S. health care system. We hope this roadmap serves health care leaders, health care system students, and anyone else interested in creating health care change.

*A special thanks to Dr. Horn (MGPO), Sarah Krevans (Sutter), Dr. Mack (BSW), Sandra Van Trease (BJC) and Dr. Wreden (Sutter) for participating in interviews on behalf of their organizations.