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The healthcare industry in the U.S. is in the midst of major market disruption.  As systems condense and integrate and nontraditional players enter the marketplace, guiding this transformation will require smart, bold action on a variety of fronts.

Human Resource teams and insurance companies have traditionally led the way when it comes to initiating and implementing improvement efforts. While they have achieved some level of success, there is opportunity to do more. Surprisingly, in the abundance of material on healthcare improvement planning, we find very little that speaks to the role of one central individual—the CEO. What precisely should be the task of the CEO, and how is this role different from that of other executives or other stakeholders?

In today’s fast-moving business environment, companies cannot settle for incremental improvement; they must occasionally make radical changes to remain competitive. This is particularly true in the age of market disruption.  In this post, we’ll look at some of the market dynamics that are driving the need to improve the healthcare delivery and cost model and examine several best practice actions CEOs can take to help accelerate these improvements, including: 

  • Clear communication
  • Strategic collaboration
  • Leading by example

Healthcare as a core business issue

A fundamental management tenant is that leaders take personal ownership of their company’s toughest challenges. Still, despite persuasive arguments, many CEOs have not treated health care costs as a central business issue. They often transfer the responsibility to other internal teams or departments that lack accountability for the company’s financial performance. This is not the optimum approach.

Getting CEOs to approach health care costs like they do other parts of their business can deliver substantial performance results. Key attributes CEOs can bring to the forefront are their motivational and influencing capabilities. They can help bolster improvement efforts by communicating the rationale for healthcare changes, securing beneficial alliances and modeling the desired changes. 

  • Clear communication. CEOs regularly make gutsy decisions that affect employees, from closing business units to discontinuing strategic operations. They make clear the reasons for the changes, and employees acknowledge them as a part of their workplace reality. Communicating health care changes should be no different.

The area of cost containment and balancing rising healthcare expenses with employee expectations is a good example. Controlling costs often requires steering employees to providers that can deliver high-quality care at the lowest price.  But imposing limitations or implementing any type of healthcare change can be met with stiff opposition—even though the change may be in the best interest of all parties.

This is where honest, transparent communication is vital.  Case in point: Walmart confidently uses financial incentives to guide employees toward a number of pre-selected centers of excellence— specialized programs with concentrated areas of expertise— for expensive medical procedures. The practice has resulted in significant cost savings. Employee complaints have been minimal because the company’s leadership has effectively communicated the reasoning and logic for the practice just as they do with any other important change in company strategy.

  • Strategic collaboration.  Strategic partnerships are essential for remaining competitive in today’s highly disruptive business environment. To become more entrenched in the ecosystems that employees engage in, it’s important for CEOs to strengthen and expand their alliances with a broader range of partners in and outside the healthcare market. CEOs are ideally positioned to work with potential partners to identify ways to work together for mutual advantage.

The trend toward value-based care will continue to drive companies to closely scrutinize their healthcare options and fine-tune their cost management approach. Business can’t do much about shifting market dynamics. But they can team together to more effectively negotiate with providers and help ensure that healthcare quality is in line with costs. Bottom line: CEOs who form smart alliances and are proactive in their collaborative approach will save more on health care as will their employees.

  • Leading by example: When substantial financial risk is at state, CEOs have a fundamental duty to roll up their sleeves and get personally involved. Leaders who give only lip-service to an improvement effort will find everyone else following suit.

Modeling the behavior you want and creating a personalized story will help employees buy into in the improvement approach by answering their pressing questions, such as “What are we changing?”  “How will it be implemented?” and “How will it impact me?” People will go to surprising lengths for issues they believe in, and a compelling example set by the CEO will establish and reinforce their loyalty (and participation) in the effort.

Key takeaways

CEOs are uniquely positioned with the responsibility and authority to articulate the strategy, vision and goals that frame every new business challenge or initiative. This is especially true when it comes to managing a transformation as significant and sensitive as employee healthcare.

For CEOs leading healthcare transformation, there is no single model for success. But they can place the odds in their favor by focusing on several core leadership actions: making the changes understandable and meaningful; modeling the preferred behavior; building a reliable and loyal team; and relentlessly pursuing results. Together, these efforts can generate the synergy needed to achieve tangible, lasting improvements.

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