Dr. Masahiro Kanno – CEO, Keiju Healthcare System, Japan
When transformation happens, it is rarely restricted to a single healthcare organization, and increasingly involves a blurring of boundaries between multiple providers. This shift towards partnerships, networks and alliances is not new. Mergers and acquisitions have been a feature of the sector for several decades, while clinical, service and wider networks have been prevalent since the 1990s, as stronger evidence emerges of the link between collaboration and quality. Some of these alliances are temporary, others have proved more permanent.
As healthcare systems try to cope with the growing pressures on their resources, many are looking to reinvigorate these networks, and put in place detailed structural and legislative arrangements to underpin multiorganizational change. In high-growth markets, completely new types of organizations are materializing. India’s Narayana Health Group has adopted some of the best ideas from the business world to create a centralized model, with a common culture and working practices, efficient supply chain and economies of scale.
Along with India's Apollo Hospitals Group, Narayana has shown that it is possible to create a unified approach across a wide variety of locations and partner organizations. However, there are fewer parallel examples in more developed economies, primarily due to entrenched organizational cultures and work practices.
The management of group facilities across a wide geography is very different to running a single-location business. In industries such as retail, the trend is for very centralized operations with little local autonomy, while other sectors favor a more federal structure.
Partnerships in healthcare have been typified by a single, large specialist hospital at the center, working with satellites of smaller clinics and other providers that benefit from the group’s scale efficiencies, in terms of both costs and patient safety. This can cause concern over monopolies, but, as Malcolm Lowe-Lauri, KPMG in Australia explains, these fears can be overcome. “The creation of large networks of specialist services in a public payer system need not lead to excessive bureaucracy or anti-competitive behavior. New South Wales Kids and Families in Australia, which works collaboratively with hospitals and community health services, GPs, primary and other healthcare providers, regularly tests the market to evaluate programs and consider new models. The key is transparency and a capacity for self-reflection.”
Academic networks are a popular form of collaboration, bringing the intellectual power and research capabilities of our best universities to increase the pace and application of innovation. According to Victor Dzau, President of the US Institute of Medicine, “Academic medicine is transformation to healthcare.”
Accountable care organizations – also known as integrated or coordinated organizations – can also help to break down the boundaries that exist between different healthcare players. Japan’s Keiju Healthcare System has managed to bring together diverse institutions, and base itself around the lives of the older people it serves. Ultimately, healthcare providers could become an everyday part of the community, involved not just in health but in lifestyle.
India’s Narayana Health Group is a shining example of modern business excellence. With 26 hospitals in 16 cities, it has become one of the subcontinent’s biggest healthcare providers – and one of the world’s cheapest – thanks to an aggressive merger and acquisition strategy, deep supplier relationships and efficient operations that maximize economies of scale.
The group is highly centralized, with, for example, a single tele-radiology hub in Bangalore that serves 29 health centers in India and one international client, offering remote X-Ray, CT, MRI, USG, mammography, PET-CT, and nuclear medicine. Its advanced cloud-based IT network offers a film and paper-free environment, cutting technology expenditure significantly, while retaining the flexibility to scale up or down without sunk costs. All software licenses are on a monthly, pay-per-use basis.
Supply chain management is equally rigorous, with strong logistics and unified purchasing. Narayana has collaborated closely with suppliers and manufacturers to develop tailor-made products at stable, competitive prices, and to ease reordering. Meanwhile an in-house design and build team ensures fast, low-cost development of buildings and facilities, using standardized designs. Last, but not least, patients also benefit hugely from the group’s businesslike approach. Services for patients with heart problems and other specialties involve collaboration with partner hospitals to provide cardiology, cardiac surgery, nephrology, neurology and neuro-surgery, with exacting standards. Such alliances utilize existing infrastructure and shared services, which reduces set-up costs.
As CEO of Japan’s Keiju Healthcare System, Dr. Masahiro Kanno oversees an organization dedicated to medical care, nursing care, welfare and preventive services. He explains Keiju’s unique approach to care provision:
“Most single-care, integrated organizations bring together acute, chronic and home care into one organization. However, this does not in itself transform the overall experience of healthcare. Our system goes beyond the current definition of sustainable care to address the growing problem of old, sick people in Japan."
“We have developed a much better understanding of the way in which patients and families actually live their lives. In order to create care that is ‘wrapped around’ older people, we collect data on patients’ lifestyle – such as dietary and exercise habits – together with medical and nursing information. This knowledge enables us to move beyond traditional healthcare, to develop lifestyle related products that create health and wellbeing for the population as a whole. There are also opportunities to contribute to the revitalization of local communities.”