Issue link: https://beckershealthcare.uberflip.com/i/490072
122 Strategy interested in using mobile devices to share health information with their pro- vider, 63 percent are interested in providing health data from wearable devices and 60 percent are interested in using telehealth options, such as video chats, with physicians. As both the RadioShack and Amazon experience shows, developing virtual capabilities requires significant focus and resources. Healthcare providers need to determine a strategy for offering virtual care, integrating it with in- person offerings, establishing price and managing reimbursement scenarios. They need intellectual capital, infrastructure and technology. Some provid- ers will opt to partner with others for these services, and some will want to develop their own. A challenging strategic decision for retailers and healthcare providers alike is determining the most effective balance between physical and virtual assets. Ra- dioShack chose to focus on its large footprint of small stores, while Amazon is contemplating adding stores to complement its online dominance. Macy's, having built a robust online presence thanks to a $2 billion investment, is clos- ing some stores and opening a fulfillment center. Wal-Mart, whose e-com- merce sales grew 22 percent in 2014, is increasing its number of small stores and slowing the expansion of its large stores. Risks and rewards In the same way, providers need to determine the best combination of single- service outpatient sites, multi-service outpatient sites, inpatient sites and vir- tual services. For organizations that get the right mix, the potential rewards are great. Providers may be able to dramatically reduce fixed costs associated with their physical assets, make more productive use of clinicians' time, pro- vide a greater level of convenience and potentially lower prices for consum- ers, and position themselves for success in an environment of value-based payment, capitation and consumer choice. Balancing physical and virtual services is a complex and high-stakes strategic challenge for healthcare providers. Compared with companies like Amazon, Wal- Mart and Macy's, America's hospitals have relatively modest resources to invest in such a major pivot in their business. And unlike Amazon, hospitals would be highly reticent to approach such an investment as an expensive experiment. Rooted in its stores, RadioShack attempted to branch out into e-commerce. Rooted in e-commerce, Amazon is considering branching out into stores. The right balance proved elusive for RadioShack; Amazon, doubtlessly, will invest extensively to find that balance. Hospitals need to move rapidly to make similar strategic calculations. With their deep roots in acute care, hospitals face a steep challenge to identify how inpatient facilities will need to change, the appropriate channels for outpatient care, and — least familiar of all — the specific virtual care options they should offer. At the same time, hospitals need to make the even more difficult deter- mination of calibrating all of these channels. Like RadioShack and Amazon, hospitals have to make these decisions in the midst of constantly changing purchaser expectations, technological capabilities and competitive pressures. These decisions are unfamiliar and extremely complex, and they carry mil- lions of dollars in risk. Yet making these decisions carefully and correctly is the new strategic imperative for a successful provider organization. n Kenneth Kaufman can be reached at kkaufman@kaufmanhall.com. This column is reprinted with permission from Kaufman, Hall & Associates. "To operate successfully in an increasingly difficult healthcare environment, BRG supported CoxHealth in implementing a performance improvement project that yielded $40M in bottom-line financial improvements." Jake McWay, Senior Vice President and Chief Financial Officer, CoxHealth TRANSFORMATIONAL PERFORMANCE IMPROVEMENT COST REDUCTION REVENUE IMPROVEMENT CLINICAL REDESIGN STRATEGY Contact us today to see what sets us apart. Paul Osborne | 305.984.1029 posbornethinkbrg.com THINKBRG.COM DAVID WILDEBR ANDT BRG MANAGING DIRECTOR JAKE MCWAY COXHE ALTH AMANDA HEDGPETH COXHE ALTH GAY CASEY BRG MANAGING DIRECTOR