HJAR Mar/Apr 2023

20 MAR / APR 2023 I  HEALTHCARE JOURNAL OF ARKANSAS economies of scope, and we will need leaders with bold visions of the future and solid plans on how to get there. To transition from a tradi- tional health system to a system that delivers health will require changing what we measure so that we can better manage it. And we will need to learn both how to define and mea- sure health so that we can hold ourselves ac- countable for delivering and improving it. We will retain some traditional objectives of care, like prevention of disease and alleviation of suffering, but we will add new dimensions to health, like improving one’s capability to do what matters most and measuring and ad- dressing emotional as well physical discomfort. Traditional health systems will need to con- front the reality of the present, because if they don’t, then someone else will. Hospitals and health systems find themselves increasingly under the threat of disruption by new, more agile competitive entrants, like Iora Health and others. Iora Health, a company consist- ing only of 600 employees — and no special- ists or lucrative proceduralists, only primary care providers, behavioral therapists, and health coaches — was acquired in 2021 by One Medical for over $2 billion. Indeed, what is currently playing out in the healthcare indus- try is remarkably similar to what played out in the computer industry 30 years ago, with les- sons that provide important insights into how we can change. Lou Gerstner, a visionary CEO himself, in his book, Who Says Elephants Can’t Dance , described a similar set of circumstances when he took over as CEO of IBM in the early 1990s. IBM’s economic model was primarily engineered around the volume-driven sales of its expensive mainframe computers. However, the rise of less expensive personal computing solutions combined with decreased mainframe sales in the setting of IBM’s same high fixed costs of manufacturing, created a grim finan- cial outlook for the company. The downside of this reshaping of the computer industry was that the customer now had to be the integra- tor of technology into usable solutions that met their individual business requirements. Gerstner responded by changing the funda- mental economic model of his company and by reengineering how they did business. In addition to economies of scale, IBM also or- ganized itself around economies of scope. By developing a comprehensive understanding of their customers, IBM focused their efforts on becoming the integrator of solutions that better met customer needs, providing value- driven services that helped their customers meet their goals, even if that meant recom- mending a competitor’s product as the best option. Such thinking was heresy within the prevailing culture of IBM prior to Gerstner’s ar- rival, as the performance of each siloed division within the company was measured primarily by volume of goods sold. In other words, doing what was best for the customer, regardless of short-term negative financial ramifications, be- came what was best for the business. Within 10 years, the services business at IBM went from being a $7.4 billion business to a $30 billion business, accounting for roughly half its work- force. According to Gerstner, “the main reason came back to the customer’s overpowering desire for someone to provide integration.” I am currently at a system that is proving that elephants can, indeed, dance. A system that delivers health becomes the integrator of solutions and services that best meets the needs of its patients. A system that delivers “A system that delivers health understands that the customer lifetime value of each patient is more important than the more traditional mindset of maximizing volume of procedures, surgeries, and visits.”