Healthcare’s Complex Business Models Require Solutions that Address All Business Model Dimensions

Clay Christensen, Harvard Business School professor and author of Disruptive Business Models in Healthcare (Forbes 2009), discusses the complexity of healthcare’s business models. He states that there are two business models simultaneously operating in the delivery of healthcare in the general hospital: a solutions business model and a process business model. Clay provides his definition of the business models: the solutions model is typical of a consulting organization, and the process model is more akin to that of a process manufacturer. He goes on to say that the solutions model should be reimbursed on a fee for service basis, while the process model should be reimbursed based on outcomes.

I agree with Clay on his observation that the two business models concurrently operate in most hospitals, and I contend that many of the technology solutions implemented in hospitals address only one business model, instead of the two that co-exist in a hospital. For example, most healthcare technology solutions are built to address process model and not solutions model requirements. There have been hundreds of millions of dollars spent on software solutions and hospital staff has been trained on how to use the software. However, a software solution that is purchased and deployed in a hospital without advisory services is doomed to fail. Why? Because there is something missing – how to integrate the software solution into solving the business or clinical problems of the hospital. This would require advisory services targeted at solving a problem, which includes not just the software implementation but also other issues that may come up past the implementation. This would be my definition of a true solution – the combination of a software product and advisory services that extend beyond training on the use of the product.

I have heard so many hospital administrators say, we don’t need more software tools; we need advisory services to solve a clinical or business problem. A true solution requires a product along with advisory services. The advisory services are necessary to integrate the solution into the day to day workflow, and manage changes that affect how to use various data feedback from predictive analytics to alter an outcome. This necessary integration of changes in workflow and business processes come from the advisory services component of a solution, not from the software tool.

Software vendors and advisory services firms need to work together to make sure what they’re selling a hospital is indeed a true solution and not just a software tool or application.