So many of the giants in the health care space today have made their millions (scratch that, billions) by building their business strategies around the system as it currently exists. There is nothing wrong with this from a strictly business point of view. The problem, argues health care strategist Jeff Goldsmith, is when these entities call themselves “health systems.”

In a recent article for Harvard Business Review, Goldsmith, a national adviser to Navigant Consulting and president of consulting firm Health Futures, explores why the term is a poor fit, and in many cases, misleading.

“Health systems” as we know them today are rife with operational inefficiencies. High costs, poor performance outcomes. U.S. health care is among the most costly in the world, and also the most inefficient. Unfortunately, what matters to these companies is the bottom line: profits.

“To be an effective health system entails much more than geographic reach or a comprehensive portfolio of services,” Goldsmith writes. “It is the effective management of the clinical enterprise that distinguishes a true care system from a collection of assets.”

To become true “systems of care,” Goldsmith outlines four requirements for today's health care entities:

Be an operating company, not a holding company. “Merely owning assets means nothing to patients and their families,” Goldsmith writes. “It also does nothing to guarantee an acceptable level of financial performance.” Rather, he says the various assets of the system should be coordinated to improve the patient experience, reduce overhead and more consistently measure operating performance.
At its core, be a clinical enterprise. A health system is comprised of individual providers and clinics, and more control and flexibility should be given at the individual level, Goldsmith says, with the overarching system providing “logistical and financial support.” This also means that the individual components should both be held to greater accountability and higher standards. “The care they provide must be organized, not improvised,” Goldsmith writes. “To drive results, the clinical enterprise should rely on strong professional values articulated by clinical leadership, not compensation formulae. Care performance should be constantly examined and continuously improved.”
Provide patients and families with a seamless and consistent experience across the system. Particularly when a health system is the product of mergers and acquisitions of smaller entities, the customer experience can be inconsistent and confusing. Goldsmith calls for the “blueprinting” if care that will lay out the path for individuals and their families as their care progress. “Families should understand their role they will play in the patient's recovery and what to expect in the way of identifiable clinical risks,” he says. “If the patient's intended trajectory, care transitions and controllable risks to that trajectory are not clear to the family, the care system has not done its job.”
“Affirmatively control” the delivered cost of care. Affirmative control refers to the process of actively managing the cost of care, which, says Goldsmith, is impossible to do without addressing the previous points. In addition, good communication between patients and their care team is essential. All parts must be working together to maximize efficiency and reduce the risk of complications caused by errors or other avoidable mistakes in the process.

Following these four tenets will bring a level of order and consistency to a health care system, which is good for both the patient and the provider. The health system is better able to manage and even reduce its costs, while patients can expect improved outcomes.

Instant Insights /

4 requirements for what today's 'health systems' should be

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