{"id":2551,"date":"2015-12-07T19:32:16","date_gmt":"2015-12-08T00:32:16","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/partners-health-care-the-doctor-will-hustle-you-now\/"},"modified":"2015-12-08T20:24:46","modified_gmt":"2015-12-09T01:24:46","slug":"partners-health-care-the-doctor-will-hustle-you-now","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/partners-health-care-the-doctor-will-hustle-you-now\/","title":{"rendered":"Partner\u2019s Health Care: The Doctor will Hustle you now"},"content":{"rendered":"

According to the U.S Department of Commerce, health care spending in the US amounted to 17.4 percent of GDP in 2013. [1] At this level of spending, an unaware observer might assume that Americans consumed a platter of world class, high value, medical services. Partner\u2019s Health Care, the largest hospital system in New England, is composed chiefly of Mass General Hospital and Brigham and Women\u2019s Hospital, the #1 and #6 US News ranked hospitals in the country respectively. [2] Unfortunately, this clinical care comes at exorbitant prices and has not been shown to be reliably superior to competing healthcare organizations. This is in large part due to the highly inefficient alignment<\/u><\/strong> between the company\u2019s business and operating models.<\/p>\n

\"money-bags\"<\/a><\/p>\n

Business Model:<\/strong><\/p>\n

The business model of Partner\u2019s Health Care is chiefly based on delivering a wide array of supposedly \u2018world class\u2019 medical and surgical services (nearly every known treatment) to patients in the greater New England region. Partner\u2019s promises to deliver high value care – medical services that lead to great outcomes at a reasonable cost.\u00a0 Due to its affiliation to the Harvard Medical School and extensive research and teaching expertise, Partner\u2019s Health Care is able to charge 1.6x more than other hospital systems in the area.<\/p>\n

However, no third party report has ever shown that most patients cared for by Partner\u2019s\u00a0Health Care routinely have significantly better outcomes than other large hospital systems.<\/strong> [3]<\/p>\n

 <\/p>\n

Operating Model:<\/strong><\/p>\n

Care at MGH, BWH, and their associated clinics is extremely centralized. Patients travel to these large complexes for treatments of conditions ranging from urinary tract infections to heart transplants. The hospitals are essentially complex job shops, where different types of physicians treat widely different conditions. In sharp contrast to the classic assembly line, there is typically not scale of any one particular kind of patient, and different types of patients are seen in succession.<\/p>\n

Partner’s Health Care has a large advantage in that it employs some of the highest achieving medical residents and attending physicians in the world based on performance in medical school and research accomplishments. It is able to pay these physicians well below the average market rate due to the prestige and opportunities provided by Harvard Medical School.<\/p>\n

 <\/p>\n

Business Model\/Operating Model Misalignment <\/strong><\/p>\n

The centralized, job shop operating model combined with a business model that promises care for every possible condition results in extremely high fixed infrastructure, labor and administrative costs. In order to treat conditions ranging from the common cold to brain tumors, Partner\u2019s Hospitals must have access to nearly every known piece of medical equipment and physician. However, the absolute number of treatments\/procedures performed for many conditions is very low, leading to low labor and asset utilization. Despite individual salaries being low, this low utilization leads to increased costs for all offered treatments and undermines Partner\u2019s value proposition.<\/p>\n

Perhaps most worrisome, MGH and BWH offer completely redundant services within a few mile radius and do not work together to optimize utilization and reduce admin costs. Partner\u2019s completely fails to unlock the possible efficiencies of scale by separating the operating management of these two hospitals.<\/p>\n

Unfortunately for society, the high fixed infrastructure costs creates a barrier to entry that allows Partner\u2019s Health Care to remain highly competitive despite its nebulous value proposition. \u00a0As competing health organizations are almost as inefficient, expect limited change from the status quo in the near future. Despite having access to some of the world’s best medical professionals, when judged from a value framework, the care is decidedly average.<\/p>\n

 <\/p>\n

Sources: <\/strong><\/p>\n

    \n
  1. http:\/\/blog.bea.gov\/2015\/01\/<\/a><\/li>\n
  2. http:\/\/health.usnews.com\/health-news\/best-hospitals\/articles\/2015\/07\/21\/best-hospitals-2015-16-an-overview<\/a><\/li>\n
  3. http:\/\/www.mass.gov\/anf\/docs\/hpc\/material-change-notices\/phs-hallmark-final-report-final.pdf<\/a><\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"

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