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Some say the "riches are in the niches". According to the article by Regina Herzlinger, a professor at Harvard University Graduate School of Business, "Market-Driven, Focused Healthcare: The Role of Managers," Frontiers of Health Services Management 16:3 (Spring, 2000), in healthcare, focused factories can offer care for chronic diseases, frequently performed procedures, and primary and diagnostic care. Such organization can present clear outcome data, charge lower prices and enhance customer satisfaction simultaneously. Focus on core competencies, pay attention to customer. Being everything for everybody causes problems because for example as the McKinsey consulting firm notes, vertical integration as a strategy lever is notoriously difficult to set, easy to get wrong, and very costly to fix.
Herzlinger's article looks at Salick Health Care, a California based provider of cancer care founded by Dr. Bernard Salick. Salick Health care apparently achieves getter outcomes with breast cancer patients than more general purpose providers because of its ability to focus. Salick data claims to show 3 to 4 times higher use of appropriate postoperative therapy than National Cancer Institute data indicate nationwide, fewer hospital admissions for chemotherapy compared to local providers, more frequent "good" to "excellent" ratings and fewer complaints than national statistics; charges at least $20,000 lower than most other providers for blood cell bone marrow auto transplants. As a result of its focus, this organization can present clear outcome data, charge lower prices and enhance customer satisfaction simultaneously.
It is interesting to note Herzlinger's referral to Pareto's Law, colloquially known as the "80-20 rule" that roughly 80% of all events can be attributed to 20% of their causes. In medical care, 10% of the population account for 75% of medical expenditures, and 25% for 90% of expenditures. The role of physicians as managers because only physicians know how to take care of patients. Herzlinger uses the term "healthcare focused factories" to emphasize that these are not virtual organizations, loosely coupled by electronic media, but rather like factories in which teams of people with disparate skills continually work together to achieve a common aim. Produce better, more affordable care. According to the article by Christine H. Markham, "New Focus For Community Hospitals: Neuro Centers," Health Care Strategic Management (March, 2000), there are many community hospital based centers of excellence in cardiology, oncology, and women's services, but few community hospitals have focused the same level of effort in program development and enhancements in neurosciences. Many neuro-related conditions have a relatively high incidence rate with many of these disease becoming chronic and increasing with the aging population. Examples of neuro-related conditions include: Alzheimers, Parkinsons, Multiple Sclerosis, Epilepsy, Stroke, Brain Injury. According to the Markham's article success needs: formalized infrastructure to coordinate wide variety of services, case management, quality assurance services, program specific marketing and promotion, administrative and physician champions, special memberships or certifications (ex. National Stroke Assn.), information systems, program budget, a foundation, and organization and support for physician outreach initiatives. A clear image is critical to distinguish a neuroscience program in the market. Risks of developing a neuroscience center include competition. According to the Markham's article, like cardiology and oncology in the 1980s and 1990s, neurosciences is an opportunity for community hospitals to create centers of excellence.
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