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Value Based Competition

In Executive Leadership, Healthcare, Human Capital Trends on March 16, 2010 at 6:12 pm

 By Brian Hudson after reading the book Redefining Healthcare by Michael Porter

In the introduction to the online home page for Redefining Health Care, there is a simple introduction that reads. “Health care is on a collision course with patient needs and economic reality. In today’s dysfunctional health care competition, players strive not to create value for patients but to capture more revenue, shift costs, and restrict services. To reform health care, we must reform the nature of competition itself.” www.hbs.edu/rhc/

This is especially true in the competition for quality licensed healthcare professionals who drive the revenue and deliver the highest in patient care. The reality is that the demand for healthcare is going up and the supply of available licensed professionals is going down. This demand cycle will be good for professionals who will see significant growth in salaries and perks, but will be a challenge for healthcare organizations to attract and retain their people.

Healthcare will need to make fundamental changes and hopefully move to Value-based competition as suggested by the authors in Redefining Health Care. The challenge for healthcare organizations is not to treat people as a commodity as the industry moves to Vendor management systems for people procurement, which were popular in the 1990’s in manufacturing. Progressive organizations understand the value of people, and that each individual is a valued revenue driver and contributor to the profit center – especially licensed healthcare professionals.

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