Blog #3: Health Care Delivery by Hospitals and Facilitated Networks

My project is finally beginning to wind down. I have completed a draft of my essay regarding the United States healthcare system. I included an overview of the history of the US healthcare system, a brief overview of how health insurance works, a description of US healthcare before the Affordable Care Act (ACA), passage and contents of the ACA, the current status of the US health insurance market, and a write up with a description of what I believe to be the ACA’s shortcomings and potential improvements to the US healthcare system. I will include in this blog post a description of issues with health care delivery in hospitals and the importance of facilitated networks for patients with chronic conditions.

In the current US healthcare system, hospitals are tasked with doing everything well and keeping costs down. Hospitals attempt to do everything for everybody, which is never a viable value proposition. Customers who use hospitals typically need one of two jobs done. Some individuals need to diagnose their health problems and figure out what needs to be done to fix them. For example, an individual with a stomach pain and a fever needs an accurate diagnosis prior to treatment. Other individuals who use hospital services know what needs to be done to solve a medical problem and want to find an effective and affordable solution. An individual who falls into this category already knows their diagnosis and may require a certain surgery. Clayton Christensen, author of The Innovator’s Prescription: A Disruptive Solution for Health Care advocates for filtering of hospital patients into solution shops and value-added process businesses based on their needs. Solution shops would function to diagnose patients and develop treatment plans. They would be reimbursed on a fee-for-service basis because factors beyond the diagnosis could influence patient outcome. Value-adding process business, which would function to solve specific patient problems, like facilitating a surgery, should be selling their outputs at a fixed price, based on outcomes, because they can typically guarantee results (Christensen, Grossman, Hwang). Christensen recommends for hospital to deconstruct their activities into the two separate business models. The accounting and pricing systems would then be separated and structured appropriately for each separate facility. The division of general hospitals into solution shops and value-adding process businesses would ensure that each hospital would solve their patients issues most effectively and affordably.

Christensen also advocates for Facilitated Networks to be established that enable communication between individuals with similar conditions. They can be especially helpful for people with chronic illnesses. dLife, an organization that facilitates the networking of people with diabetes and their families, developed a model that can help users deal with challenges in treating their chronic illness. Enabled by instantaneous connectivity of the internet, WebMD also built networks for patients with chronic conditions. This will allow individuals with similar conditions to learn from each other (Christensen, Grossman, Hwang).


  1. jlmaniaci says:

    Hi, this is a great project! I am fairly interested in the American Healthcare system as well. Does Christensen discuss how a fee-for-service model will prevent healthcare entities from ordering unnecessary tests to ‘run the bill up?’ Unfortunately, many analysts believe that billing patients for each measure performed will lead to a higher number of unnecessary medical procedures than if patients paid a fixed rate for a return to normalcy.

  2. cccopeland says:

    That’s some very interesting stuff! I wonder how technological advancements will impact the future of health care – will we see cheaper drugs, accurate diagnostic robots, or anything like that? Only time will tell!

  3. krhopkins says:

    Hey Andrew, it’s Kathy again! I’m fascinated by your project and am excited to hear that you looked into the complex delivery of care that is actually provided to patients in US hospitals. What exactly is a value-added business model and why would it streamline patient care, making it more efficient and less convoluted for patients? I appreciate the concept of facilitated networks so patients with chronic conditions like diabetes can have a “one stop shop” opportunity to receive care. Did you look into the concept of health coaches where patients have a single liason to each of their care providers? This one coach can help a patient keep track of different appointments for nutrition, retinopathy screening, and regular medication updates since that is a lot for the common person to juggle. Hope you’ve enjoyed your research because I’ve really enjoyed reading about it!

  4. Natalie Walter says:

    Hi Andrew! Exciting that you’re almost done with your research at this point. Your summary seems really interesting, and I would be interested in reading the final product. I just spent the first half of the year in Germany, and spent a lot of my time doing my best to explain our health care system to the different people I met there – they would always ask why isn’t it working? How could it be better? Why do you conduct it like this? And I often found myself not well enough equipped to answer the question, and asking myself these questions as well. I think your paper could be helpful to many people in the United States, but I would also be interested in perhaps seeing a comparison between healthcare systems in different countries that have a high satisfaction rate from patients! I was just wondering if you had looked into that at all?

  5. mdelbianco says:

    Hi Andrew,
    Great blog post! Hospitals are absolutely overwhelmed with these two jobs, especially in suburban areas. We’ve seen evidence of this in the Tidewater area with the growing network of Sentara.
    A great place to showcase the two presented care categories is the emergency room. The ER might be thought of as the open marketplace for healthcare, with solution customers, such as some with severe chest pains, and value-added customers, like those who need stitches for a cut. It seems we are already witnessing a solution to this problem with the rise of urgent care centers.

    I look forward to reading your final blog post!

  6. ammeadows says:

    Thanks for the thoughtful comment! Christensen recognizes the issues with fee-for-service and built the model I discussed to try to reduce fee-for-service reimbursement as much as possible. Unfortunately, pricing for treatments related to diagnostics can be highly variable so a fixed rate typically would not work. He talks about the Kaiser Permanente model, in which individuals pay a fee to use unlimited services, but the health care provider has incentive to cap procedures. This requires a high amount of coordination and consolidation between health care providers, so some geographic areas may be less able to support such systems.

  7. ammeadows says:

    Hey Cam, thanks for the comment! Technology will definitely play a huge role in changing health care over the next few years. I’d recommend reading Christensen’s book to learn more about his vision for the future of healthcare if you’re interested!

  8. ammeadows says:

    Hey Kathy, thanks for your comment! I’m glad to see you’re interested in the project! An example of a value-added process business would be a restaurant. Because they focus on a single job and can integrate the entire process, they produce repeatable high-quality results with much lower costs. Facilitated networks would help supplement regular care by enabling people with similar chronic conditions to learn from each other. I read a little about the idea of a health coach, which would certainly help to coordinate care for complex conditions that require multiple doctors. I think the best solution to help integrate patient care is through technology and integrated delivery of care. For example, at the Cleveland Clinic, teams of doctors that are necessary to solve complicated health issues are located close to each other to enable better coordination. Electronic health records can also help to facilitate this communication!

  9. ammeadows says:

    Hey Natalie, hope Germany was a lot of fun! I didn’t know too much about US healthcare going into the project so I tried to start with the fundamentals and build my paper by asking myself relevant questions. Initially, I had planned to compare the United States healthcare system with those in Canada, England, and Germany, but I ran out of time. That topic in itself would probably take an additional 50-page paper to fully flesh out! However, with a few fixes that I go through in my paper, I believe United States market-based healthcare will be able to better compete with the accessibility and popularity of healthcare in other developed countries with single-payer systems.

  10. ammeadows says:

    Hey Megan, hope your summer has been going well! You’re right, the ER and urgent care centers must handle both business models. I don’t think a separation will be possible for these institutions because the care must be provided promptly and the patients likely will not know exactly what is wrong/what job must be done to fix their ailments. I look forward to learning more about your research at the showcase!

  11. brhighland says:

    Hey interesting project! The American healthcare system definitely needs more study and solutions. I wonder, though, if the “filtering of hospital patients into solution shops and value-added process businesses based on their needs” and the recommendation “for hospital to deconstruct their activities into the two separate business models” would increase patient healthcare costs. Perhaps it would be a more efficient system, but all the research that I am aware of, which to be honest is not an incredibly large body of research, seems to indicate that integrated care is the way of the future. Instead of deconstructing, would it not be more efficient and cost-effective to centralize?

  12. ammeadows says:

    Thanks for the comment! I understand your concern about integrated care. The proposed system would actually enable greater integration. Rather than structure hospitals to do everything, such a system would allow for greater integration because related doctors would be working with each other. One of the delivery models Christensen suggests entails physicians that specialize in the particular molecular pathway of the disease working in a central location! Leading health care providers like the Mayo and Cleveland Clinics structure their services like solution shops. Centralization has actually led to underutilization of fixed assets within hospitals, like MRI machines, increasing the cost per treatment/use of the equipment.

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