Service Business Model Innovation, the fourth case study from our recently published book chapter

As we a few weeks ago, M2HCC authored a chapter entitled “Essential Characteristics of Service Business Model Innovation in Healthcare: A Case-Study Approach” in Service Business Model Innovation in Healthcare and Hospital Management published by Springer. Today we share highlights from the fourth case study we feature in the chapter.

Sutter Health and the Sutter Medical Network
Sutter Health is a community-owned, not-for-profit health care system operating in northern California. The system has over 50,000 employees and 5000 affiliated physicians. Facilities include 24 hospitals, 34 outpatient surgery centers, 9 cancer centers, 9 neonatal intensive care units, 6 behavioral health centers, 5 acute rehabilitation centers, 5 trauma centers, and more than 4,000 licensed acute care beds. Sutter was recently named as one of the Healthgrades Top Hospitals in the U.S. for 2017.

We talked with Sarah Krevans, President and CEO of Sutter Health, and Don Wreden, M.D., Senior Vice President for Patient Experience, about how Sutter has been able to build the trust necessary to move from a diverse health care delivery system with inconsistent patient experience to a more integrated approach over the past several years. Their advice to build trust, cooperation and leadership? 1) Find a way to collaborate; 2) Embrace strong leadership; 3) Change takes time; 4) Acknowledge innovative ideas can come from anywhere.

Find a way to collaborate
Sutter was able to build trust that lead to service innovation, first, by finding ways to collaborate. Sutter’s collaboration efforts initially focused on selecting common clinical performance standards, goals and measurement mechanisms seeking to develop new and more efficient ways of delivering coordinated, consistent, high quality health care. It was essential to unite around common clinical goals so the medical group partners were motivated to work together in attaining clinical goals focused on patients. The common clinical goals were driven in part by looking at the varying practice styles of health care practitioners across the organization in a non-threatening way. For example, by aiming to reduce clinical variation, Sutter helped clinicians focus on the goal, instead of demanding practice style change.

As our Sutter case study interviewees described it, “we got our training wheels” by doing small, focused clinical initiatives where providers could agree on the goal and “could all understand how to work together.”

Embrace strong leadership
“We remember the health care market of the 1990s,” said Dr. Wreden, “where hospitals were buying medical groups without a clear strategy for clinical integration. We know now that didn’t work out in California.”

What Sutter did instead was nurture engagement of physicians in leadership roles and commit to educate and train physician leaders—which was part of a cultural evolution in the industry. Developing leaders, perhaps not surprisingly, requires a vision that embraces the importance of physician leaders.

One way to encourage leadership, Krevans explained, is not to be afraid of bringing in strong leaders through growth or mergers. If a strong leader exists outside the organization, it is okay to keep that leader engaged and interested in serving the Sutter mission when they come into the organization. As part of its commitment to developing leaders, one particularly innovative approach Sutter uses is to evaluate for leadership potential as part of the recruitment process. “We invest in team development,” Krevans said. Sutter seeks to ensure that it is growing and recruiting the right leaders; for Sutter, a leader needs to be thinking about how to better integrate the health care services the organization provides in service to the needs of the patient.

Trust takes time
Dr. Wreden further explained saying, “We facilitated this evolution by giving true responsibility to physician leaders. We ensured they were focused on partnership, collaboration, shared accountability” and they were serving patients the culture that supports a trusting, cooperative organization. However, both leaders acknowledged such an approach “is fragile, and takes time—it can’t be done in a year.”

These Sutter executives recognized that in today’s turbulent health care market, organizations needing to innovate will probably have to move faster than Sutter had to when they embarked upon this journey several years ago.

Acknowledge innovative ideas can come from anywhere
Finally, and uniquely in the case studies M2 wrote, the Sutter leaders advised health care organizations seeking to innovate their service model would do well to recognize innovation can come from people from a variety of backgrounds, including those with non-clinical training or experience.

For example, in 2015, Sutter hired Chris Waugh to be its first Chief Innovation Officer. Waugh had previously held leadership roles at IDEO, a global design firm that creates human-centered design. Sutter also relies on ethnographers, technologists, and other types of experts, to name a few, to ensure the organization is always improving at serving patients.

One of the key lessons from Sutter Health’s innovation experience is: “Don’t just value a particular kind of leader. Respect every member of the team,” according to Krevans. It is important to appreciate the skills and background of all different kinds of staff within the organization.

“Innovation in the service model and true breakthroughs will come from this range of expertise,” said Krevans.