The Second Life of Hospitals: What Hospitals Should Do When Healthcare Goes Home

By Jonathon Swersey

It’s ironic that healthcare, the sector charged with caring for the ill, has been one of the worst impacted by the pandemic. By April, 1.4 million healthcare workers had lost their jobs, with approximately 135,000 of those employed in hospitals. The financial losses to hospitals will be “catastrophic” at an estimated $323.1 billion by the end of 2020. And that’s conservative. With people continuing to put off elective surgeries and regular checkups, the toll could be even greater. In-patient volumes have dropped by 19.5% from 2019 averages, while outpatient volumes have decreased by 34.5%. Most hospitals and health systems do not see a return to 2019 numbers anytime soon. COVID has obviously exposed an unpreparedness for pandemic response in the US but, more importantly, also revealed an existing and massive weakness in the financial stability of America’s hospitals.

This confluence of factors has jolted the hospital world. With eyes now wide open, what should legacy hospitals be doing to be ready for tomorrow? What becomes of their purpose? Their identity? Their operational and strategic and business focus? 

We believe that the right way to navigate toward a better future for today’s hospitals is to systematically explore each of the following classic elements: desirability, feasibility, viability, and culture.

Desirability: Walk a Mile in Their Lives 

At EPAM Continuum, we know that the most successful organizations put people front and center, and so we begin with desirability. For most hospitals, who your customers are is either not obvious or, worse, not considered. Depending on your market and your institution, your customers may include local patients, national patients, international patients or maybe private and public payors, industry and community partners, and perhaps even donors. Once identified, you need to walk a mile in your customers’ lives to understand and crisply define both their functional and emotional needs. We know from our nearly four decades of work in this area that the most successful innovations come out of organizations who have the best understanding of their customer needs and embrace the hard work of translating those needs into the other parts of the business model.  

For example: The in-patient room is a strange place, one often shared with another patient and their family who are tended to by different nurses, therapists, assistants, and oftentimes doctors. Those teams don’t coordinate schedules—meaning there is usually a non-stop set of interruptions on one side of the room or the other—making rest, which is so critical to recovery, hard to achieve. Perhaps the extra rooms could be used to create better experiences, providing private rooms (reimbursement aside) that allow for more rest and more comfort for caregivers and family.

Viability: Even Resplendent Ideas Must Be Financed

Next up: revenue models. There’s a tremendous range of models to consider. Will you be serving up a low-cost, high-volume experience that provides good enough care? Will your offering include a resource intensive concierge-like experience? If so, how will you make money doing that? Will reimbursement alone be sufficient, or will you need other sources of revenue? I recently read a journal article that argued for the creation of a multi-disciplinary department of clinical artificial intelligence. It’s a resplendent idea… but one that will have to solve the revenue problem, if it’s to be successful.

While many healthcare institutions operate on a non-profit basis, making money is a critical step towards successfully pursuing non-financial goals.  

One option: A hospital could explore how it could transform from being a center of sickness, into a center of wellness. Maybe some of these spaces can be used to create a new set of wellness offerings tailored to customers’ new needs. These could include everything from fitness-related activities to centers for mindfulness to help address our acute behavioral health needs. Or perhaps there is a new expression of some form of assisted living that is possible to integrate into a hospital campus.  

Feasibility: What You Need to Make It Real

A feasibility plan must identify the specific sets of people, skills, and technologies required to satisfy your customers’ needs—and your business’s profitably. Does your future involve, say, becoming a global center for cardiac surgery? If so, you’ll need to provide not just world-class medical treatment but also possess a range of competencies and tools to attract patients from around the globe. These might involve a different set of finance skills, including learning how to manage foreign exchange risk, to travel docents who can help a patient and their family get to your hospital and anchor themselves in your community from the surgery through recovery, to translators. And from a technology perspective, you’ll need to obtain and ingest a patient’s medical records and share the appropriate information with their care team back home.

For example, many hospitals already have relationships with industry, related to research and development. Those same assets might be useful in a new kind of relationship—one that delivers regional biopharma manufacturing hubs to tighten up our loose and vulnerable supply chains. The US no longer manufactures antibiotics, for instance; perhaps hospitals have a role in being the front line in reestablishing that capacity.

Culture: The Unsung Hero

Culture is often the unsung hero of the business model. It’s really the foundation upon which a business rests. Culture provides the internal environment for your innovations, an incubator of sorts, that has its own parameters that heavily influence the trajectory of new ideas. The very best organizations have not only the right mix of talent, but a culture that is fertile for all—one that celebrates team members who drive the core business every bit as much as those who chase down and develop the new ideas. In a hospital setting, it is the balance between those who deliver the standard repertoire of care and those who are driving research into the latest therapies. To put it plainly, the cultures needed and expressed in rural community hospitals will of course be very different than those at large urban academic medical centers—both are critical, but they imply a different set of constraints and enablers for your organization’s goals. 

Let’s take Boston Children’s Hospital, for example. It consists of 11 different foundations that all operate under the BCH moniker—which means, culturally, that it’s rather tribal. Because the current shift in healthcare doesn’t match this kind of structure, arguably, BCH may have a tougher time responding to the shifts required.

COVID Calls for a Redesign

The U.S. is currently experiencing a third and what appears to be a massive wave of COVID infections, crossing 100,000 new cases diagnosed every day. At present, there are more than 65,000 patients hospitalized with COVID, in a country that has only about 55,000 ICU beds, and a dire shortage of skilled staff to tend to these patients. Despite advances in COVID care, our system is cracking. All of this is affecting healthcare in profound ways as hospitals have had to cease offering often lucrative elective procedures and patients, aware of the situatuon, are delaying visits to ERs until problems are much worse.  

Hospitals need to innovate by first developing a new understanding of the shifts in consumer needs. With a sharply defined understanding of what people want and need now, they must consider the necessary structure—business model, facilities, employees, tools and technology, care design—to deliver that value proposition. 

It’s quite clear: Hospital infrastructure as it is currently deployed is becoming an albatross. Shiny new buildings capture the minds of ever-willing donors and are often sources of pride for hospital administrators and staff, but lack of flexibility in design has locked hospitals into operating models that cannot respond quickly enough to the changes required by the present environment. In the last couple of years, for example, both Massachusetts General and BCH have each initiated billion-dollar expansions neither of which is increasing the kind of capacity required today.

In developing more flexible infrastructure, hospitals should reconsider aspects of their role in healthcare and look beyond the healthcare environment of today towards one with a range of needs.  

Let’s be honest: Designing and creating the second life of the hospital, during the COVID-19 pandemic, will surely be a daunting experience. Those hospitals that will have the best chance of figuring out the right way forward will be those who put in the effort to think holistically, design carefully, and iterate when necessary. Is yours one of them?

Jonathon Swersey is with Innovation Consulting, EPAM Continuum.