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Is revenue generation really the strategy in healthcare?

Healthcare systems are being buffeted by multiple external groups demanding more and more measurements be reported. Some are regulators, the system boards, varied insurers, and some are professional interest groups. It is estimated by the American Hospital Association that at any given time hospitals and health systems may be reporting on more than 300 metrics to external entities.

Harris and Tayler in the September-October 2019 Harvard Business Review outline a danger when metrics become “too central” to an organization’s strategy execution. They use the difficulties Wells-Fargo encountered when members of their sales staff developed a “cross-selling” strategy, whereby these employees opened 3.5 million deposit and credit card accounts without customers’ consent in an effort to meet metrics that rewarded them with increased salaries for cross-sales success. 

Every day, across almost every organization, health care included, strategy is being hijacked by numbers, just as it was at Wells Fargo. It turns out that the tendency to mentally replace strategy with metrics—called surrogation—is quite pervasive. And it can destroy company value and confuse the mission.

A clinical example of metrics assuming too large a role was shared by Dr Jaya Mallidi in Medscape (June 3, 2019) when she detailed her experience of external reporting metrics impacting patient care in cardiology. She titled her manuscript, “Conveyor Belt Medicine: Where are the Brakes?” The story she shared involved a woman rushed to a catheterization suite whose clinical evaluation had been at best brief due to the ever-present pressure of meeting the “door-to-balloon” time reporting requirements in heart care. It turns out this patient simply had a high potassium value leading the “automated” ECG reading to suggest an anterior myocardial injury. In fact, myocardial injury was not present in this patient. Dr. Mallidi eloquently details how hard it is to stop chasing the metric of door-to-balloon time in cardiology in modern health care delivery.

A more insidious metric being chased daily in health systems is margin from clinical operations. In brief, the reason for this being important inside health systems is that bond ratings are established and maintained by margin targets being met. Meeting margin impacts the “cost of money” within these health care entities. When you consider all the building going on in health care today, bonds are used extensively in financing these hospital building programs. This is how revenue and margin become metrics to be chased; and chased daily in C-suites across the country.

It is clear to me as a patient – and as a physician – that strategy about patient care needs to keep the patient at the center of strategy. A simple strategy is to get the patient just the care they need, not more and not less. Setting surrogation aside, it really isn’t about margin!