Digital Care – The Opportunity and Threat for Metropolitan, Community, and Rural Hospitals
By Cody Strate
Cody Strate is managing partner of Upward Spiral Group of Boulder, CO.
In 2002, I began my career on the vendor side, helping hospitals move away from NCR forms and embosser cards towards centralized e-forms that could be printed on demand, which was some serious eyebrow-raising stuff back in the day. For the next 18 years, I had the pleasure of working with some wonderful people to institute digital solutions to vexing paper-based processes at over 1,000 hospitals spanning more than a dozen countries.
I stepped outside the acute care space in 2019, gaining exposure into how leaders in other industries fundamentally think about the market they serve, the importance of value, proactive versus reactive mindsets, and intent towards consumer experience.
After dancing with technology solutions and problem solving in other industries, I can clearly see that there are some threats not too far afield for hospitals that the all-too-pervasive status quo thinking approach to operation, mindset, and leadership is ill suited to handle. I wanted to write this article to call attention to a few things in hope that it opens a few eyes and facilitates some fresh thinking.
Specifically, I’m going to focus this piece around one single theme, which is the opportunity and threat brought about by the ability to extend care across great distances thanks to advancements in technology, a large and reliable communication network infrastructure, and the prevalent adoption of smartphones.
Caveat alert: given the massive institution that is the hospital and health system ecosystem, there are exceptions to every situation and rule. In other words, this is a generalist view derived from the aggregate of my experience of thousands of interactions with healthcare leaders.
The Stakes: Revenue
Just so we’re clear upfront, the cold hard calculus of the following is that pretty much everything comes down to revenue opportunity versus revenue threat. Revenue is the lifeblood of any company in any industry, and hospitals are not immune to this fact. I could elaborate on this, but I don’t think readers need any Finance 101 lessons from me, so let’s just leave it at: (a) lots of revenue = good, versus (b) little revenue = bad.
The Digital Attack on Proximity-Convenient Care
This situation cuts a couple of different ways that we’ll get into, but before that, let’s get straight on what’s happening. It’s a basic principle and rather self-evident that as technology progresses, it consistently renders “impossible” into “possible.” Case in point — the vast geographic distances that kept people isolated from each other, education, services, and so on, are now being bridged through technology.
Proximity Based Care: The Way It’s Always Been
Community hospitals generally exist in an orbit around a metropolitan center, where total beds decrease as distance from the metro area increases. This geographic distance has set the stage for the conventional model we see today, where care is largely accessed and delivered based upon these geographic constraints. In other words, if you live in a rural area, your choice of care is largely dictated by geographic proximity to care. This was my situation as I grew up in rural northeast Texas, where driving into Dallas for big-city healthcare was out of the question. Simply put, geographic proximity to care correlates to convenience of care, which up to this point has served as the primary basis for choice of care.
Potential Winners: Metropolitan Hospitals
Thanks to the combination of (a) 85% of the US population has a smartphone in hand, 84% in suburban areas versus 80% in rural areas; and (b) the emergence of digital capabilities to offer care through these devices, metropolitan hospitals can extend their reach out into suburban and rural areas. If I’m a metropolitan hospital, I would be creating targeted ads regarding specific services to even more specific personas and deploying them through the Facebook ad network, Google display ads, YouTube, TikTok, and the like.
The siren’s song of getting big-city care in palm of your hand can be tempting to people who traditionally are separated from the big-name healthcare due to physical distance. Marketing access to big-brand name healthcare that’s convenient and digitally accessible to these populations can be a lucrative practice for metropolitan hospital systems looking to add more revenue and/or recuperate revenue lost to specialty care service organizations.
Potential Losers: Community and Rural Hospitals
Whereas metropolitan hospitals have the potential to go on the offensive to bring in more revenue, suburban and rural hospitals are a greater risk of having the patients within their community, along with all accompanying revenue, effectively poached. Convenient access to quality care through one’s smartphone is here, and it will only continue to become more mainstream. This places leadership at community and rural hospitals in a precarious situation. The question is how these smaller facilities will strategically position themselves going forward.
The Mindset Problem: BWADITW Thinking versus Proactive Thinking
After stepping away from the acute care industry for a few years and seeing how other industries operate, there’s one thing that’s clear. Generally speaking, the mindset of hospital leadership is largely one set on BWADITW (“because we’ve always done it this way”) versus opportunity and/or threat-based agility found in many other industries.
This should not be a surprise given that most hospitals have the two things required for BWADITW thinking to flourish: (a) size, since these are very large organizations; and (b) time, since many hospitals are long established serving many generations of their community. However, BWADITW thinking stands as a tremendous threat to community and rural hospitals as it offers an alluring false appeal of safety. Building a fixed strategy based upon what’s worked in the past is folly given technology’s acute ability to alter the landscape of the future. If you want to apply lessons from history, consider a more Darwinian lesson of “adapt or die.”
A more vile and derivative threat born from BWADITW is thinking your patient in your area owes your community or rural hospital unwavering fealty. This is complacent leadership at its worst, thinking that your patients owe you something rather than you owing your patients something. Your organization may have been the only game in town for decades, but that is no longer the case. This begs the question — are you working to earn your patients’ business, or are you resting on laurels expecting your patients’ business?
Move Quick and Focus on Earning Your Patients’ Business Rather Expecting It
In industries that are rife with aggressive competition, there is an understanding born from survival. If you want to earn the business of your consumers, you have to offer more value than the other guys. Value is the key here, and it comes in many forms ranging from quality, convenience, cost, convenience, customer experience, and so on. My fear is that certain hospitals may have grown complacent due to a lack of competition, which does not bode well for protecting future strategic interests.
Metropolitan hospitals, it’s a smart move for you to pursue and seize revenue opportunity by leveraging technology to extend the service boundaries of your organization. If you can offer a service that tangibly has more value for the end consumer, then fair game.
Community and rural hospitals, you should act fast to get in front of this threat and seize the opportunity to leverage technology to offer your longtime customer base the best possible consumer experience before they explore any lures from the big-city hospitals. Your goal should be to proactively provide better service, offer more value to your patients, and lock in new consumer behavior patterns. Be proactive in exploring ways to expose your customer base to a new and more convenient way to access the care offered by your facility as a first line of defense, while still having them come to your facility to access face-to-face level care. Do this and you will develop new behavioral patterns in your consumers / patients that any outside competition will find difficult to break.
Simply put, by focusing on providing a quality consumer experience, you will concurrently better serve your patients, continue to fulfill your hospital’s mission statement (often built around how you exist to serve your community), and protect your financial interests from outside invaders looking poach your you patients and revenue.
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