Hospital networks: quo vadis?

Hospitals are increasingly joining forces in networks of different types, sometimes with other healthcare players. This is an unmistakable trend, but forming networks is also an important strategic decision. How can hospitals ensure the right decisions are taken, both today and tomorrow, guaranteeing a robust, resilient and versatile organisation in the long run? Changes are rapidly succeeding one another, but who knows what healthcare will be like fifteen years from now and what the best set-up would be for these networks? No one can predict the future. However, despite all the uncertainties, a scenario analysis can help in the decision-making process.

Imagine the future

A scenario analysis is not about predicting what will probably happen, but rather about coming up with plausible alternative ‘futures’ that differ depending on external factors that are, at present, still uncertain. Typically, you opt for the two factors that will have a major impact and that harbour the most uncertainty. For each factor you then choose the two most extreme situations, which allows you to describe four possible future scenarios.

Based on interviews and two consecutive workshops, a research team at Vlerick Business School, together with managers of several Belgian hospitals, came up with four possible scenarios for the future of healthcare in Belgium and, consequently, of the networks.

Two uncertainties

The preparatory interviews did indeed reveal that decision-makers in the healthcare sector have to deal with quite a few uncertainties and obscurities. The most frequently quoted ones were the degree of privatisation in healthcare, the role of the patient, the reimbursement system, the degree of out-patient care, the types of technologies that are available and the role of the government. During the first workshop, the participants analysed those six uncertainties to ultimately select the two that they considered the most important: the reimbursement system and the types of technologies that are available.

  • In terms of reimbursement, they opted for pay for service, which, as the name suggests, is service-focused, and pay for performance, which is result-driven. These two represent the two extremes of the spectrum.
  • The types of technologies that are available vary from supporting technology – which is the result of improvements and/or innovations, to, most of all, make healthcare better, more efficient and cheaper – to enabling technology, which manages to radically alter the healthcare sector by enabling entirely new forms of care. For example, technology that allows patients to carry out certain tasks themselves, without the need to rely on care providers.

Four scenarios

During a second workshop the participants devised a scenario for each combination of uncertainties, which resulted in four possible network scenarios: disease care, privileged care, connected care and health care.

  DISEASE CARE PRIVILIGED CARE CONNECTED CARE HEALTH CARE
TECHNOLOGY Supporting Enabling Supporting Enabling
REIMBURSEMENT For service     For services For performance For performance
Focus Disease Disease Best quality for minimal cost Triple aim: health, cost, disease
Incentive Volume Volume through innovation Operational excellence and standardisation Clinical excellence
Mode of action Reactive Proactive when affordable Proactive when available Preventive and proactive
Organisation Decentralised, limited differentiated offer Decentralised with strong privatised healthcare Virtually centralised, physically decentralised with specialised centres Virtually centralised, physically decentralised with specialised centres and substantial extramural activity
Integration of care Not integrated, protective Not integrated, protective Collaboration and coordination Integrated total care
Treatment Standard Standard for many, innovative for few Echeloned treatment Personalised treatment
Innovation Slow Unbalanced due to two speeds Under pressure due to cost consciousness Fast
Network Power play networks Little to no networks Networks with hospitals in central position Networks with hospitals not necessarily in central position, industry as stakeholder

You can find a detailed description of these scenarios in the published research paper 'Impact of Uncertainty in Times of Network Formation.

Where are we now? And where are we heading?

Do the participants think there is an ideal scenario? They agree that the fourth scenario, health care, should be preferred from a social point of view. The Belgian government encourages cooperation, not only because it saves costs, but also because combining expertise in multidisciplinary teams benefits the quality of healthcare services. That being said, the current situation in Belgium is closer to the first scenario, disease care. Our healthcare system bears the consequences of the reimbursement-per-service approach and most hospitals are still overwhelmed with the digitisation of their own data stream. Therefore, the electronic data exchange with other institutions and players in the healthcare sector takes a backseat.

It is expected that the electronic patient case file will be a key stimulus for a possible evolution towards a situation as described in scenarios 3 and 4. The workshop participants feel it is very unlikely that in the next 15 years the healthcare sector will evolve directly from disease care to health care, and they question whether that last scenario is even a possibility. They feel a transition via connected care or privileged care is more plausible (see image 1). They believe the shift to connected care would be stimulated by the current political policy, which focuses on cost efficiency and slowly but surely appears to be moving towards result-dependent reimbursement. Hospitals that have access to innovative technology and expertise would benefit more from a shift via privileged care.

Four possible scenarios for hospital networks
 
Image 1: Possible transitions from disease care (current situation) to health care (the ideal situation) according to the workshop participants.

What’s next?

The main advantage of a scenario analysis is that the different scenarios highlight challenges and opportunities that you would otherwise overlook. The scenarios help you think proactively rather than reactively, and recognise initial signs of change allowing you to anticipate rather than react.

Each of the scenarios developed forms the basis for further development and analysis. Every organisation may focus on a different scenario out of these four. The main challenge for hospitals is taking decisions that yield results in each scenario, because it is only then that both individual organisations and networks can become robust, resilient and versatile.

Keen to find out more? Read the full paper ‘Impact of Uncertainty in Times of Network Formation. This study was partly made possible thanks to the unconditional financial support of our corporate partner Roche.
 
About the authors
Brecht Cardoen is Associate Professor Technology and Operations Management at Vlerick Business School and at the Faculty of Economics and Business of KU Leuven. He also manages several initiatives at the Vlerick Healthcare Management Centre, including the MINOZ Research Centre. Carine Peeters is Professor of Strategy at Vlerick Business School. Walter Van Dyck is Associate Professor of Technology and Innovation Management at Vlerick Business School. He is also Chair Technology & Operations Management and Coordinator of the Health Sciences and Business Institute (HSBI) of Vlerick Business School and the Leuven Institute for Healthcare Policy. Lies Schoonaert is Senior Research Associate at Area Healthcare of Vlerick Business School.

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