Rethinking the Hospital - Value of business models for hospitals
1. Rethinking the hospital
The value of business models for hospitals
Master thesis Maarten den Braber (m@mdbraber.com)
2. What is this presentation about?
• Strategy
• Hospitals
• Value
• Business model
Business model
Customer! Value! Market! Strategic! Value! Competitive! Cost /! Value !
preferences ! proposition! segment! position! chain! strategy! revenue! delivered !
value! value!
implementation!
creation! appropriation!
5. Demand-side
demographics
disease patterns
public expectations
Pressures are rising
Supply-side
knowledge
workforce
Societal
financial pressures
internationalization
global R&D
6. Zero-sum competition
• No value is created
• Competition is about shifting costs, increasing
bargaining power and competition to capture
patients
• Escaping through value-based strategy
Porter & Teisberg (2006)
9. • Specialized medical care considered core business
• Decisions often supply-driven
• Scale and scope important decision criteria
• Governance structure complicated
• What are reasons for success and failure?
What issues? 5 examples
21. Business model
Customer! Value! Market! Strategic! Value! Competitive! Cost /! Value !
preferences ! proposition! segment! position! chain! strategy! revenue! delivered !
value! value!
implementation!
creation! appropriation!
Business model: build strategy
• Comprehensive
• Coherent
• Structured
22. Value! Market! Strategic! Value! Competitive! Cost /!
proposition! segment! position! chain! strategy! revenue!
Value proposition: core functions
• What (and for who), where, how and when?
• What are your core functions?
Curing sick people or keeping people healthy?
• Who are your stakeholders?
Patients, family, physicians, nurses, insurers, ...
• Who is your customer?
24. Value! Market! Strategic! Value! Competitive! Cost /!
proposition! segment! position! chain! strategy! revenue!
Market segment: define potential
• Who and how many?
• What defines your market?
Geographic region, specific illnesses?
• What is your market potential?
Market size, share, volume, growth, ...
25. Value! Market! Strategic! Value! Competitive! Cost /!
proposition! segment! position! chain! strategy! revenue!
Strategic position: link with environment
• What is inside and what is outside?
• What is our position in the value chain?
Who comes before, who comes after?
• How do we balance scale and scope?
Compete, collaborate, collaborate to compete?
• What is our governance structure?
Who runs the organization, what are the dependencies?
27. Value! Market! Strategic! Value! Competitive! Cost /!
proposition! segment! position! chain! strategy! revenue!
Value chain: exchanging value
• How to structure processes?
• Link value exchanges to the core functions
Does the exchange add real value?
• Optimize the value chain
Lean management,TQM, Six Sigma...
28. Value! Market! Strategic! Value! Competitive! Cost /!
proposition! segment! position! chain! strategy! revenue!
Competitive strategy: stay ahead
• What is your advantage?
• Tools and techniques already available
PESTEL, SWOT, 5 forces, ...
• Non-profits need competitive strategy
Just as for-profits organizations do
• Current: quality is medical-technical quality
What other types of quality are possible?
30. Value! Market! Strategic! Value! Competitive! Cost /!
proposition! segment! position! chain! strategy! revenue!
Cost structure / revenue potential
• Make your activities sustainable
• Cost and revenue mean more than accountability
Investment needs, projections, variable/fixed costs, ...
• Balance your service portfolio
Profit centers versus cost centers
• Tools: do not reinvent the wheel
BCG matrix, GE matrix, ...
32. Business model and the hospital
• Does it fit? (suitability)
• Will it work? (feasibility)
• Will it be used? (acceptability)
33. Suitability: does it fit?
• Makes decision-makers smarter
• Aligns with organizational specifics
• Makes knowledgeable about succes and failure
• Possible to test current and analyze new scenarios
34. Feasibility: will it work?
• Not easy moving away from established policies
• Business model helps building and connecting logic
• Many tools available already that can help
• Strategic mindset in the whole organization is needed
35. Acceptability: will it be used?
• Again: not easy moving away from established policies
• There is willingness to change
• Inclusive ways are an addition to current methods
• Business model reduces complexity
36. Conclusions about the business model
• Business model makes decision makers smarter
• Comprehensive. Coherent. Structured.
• Aligns well with the organization
• Needs effort and time to be implemented
• Delivers value... for customer and organization