Healthcare chief executive officers: the best of times; the worst of times

The job of a healthcare chief executive officer (CEO) has never been harder. We do not refer to the many problems CEOs face regarding regulation, cost containment, resource utilization and customer/patient experience. These are difficult problems but they are not new. Besides, CEOs have employees to deal with many of these problems. Where the CEO stands alone is in having the task of changing and upgrading the organization to thrive in the future, averting risk and seizing opportunities. This responsibility falls squarely on the CEO’s shoulders.

Employees go to work and do their jobs every day. Most do not think about the strategic future of their organizations; others do but have little power to change it. The CEO’s job, by contrast, is to get good results today and also to plan for future success; in sum, to implement a vision for the future.

What is new and, we believe, substantially different, are the accelerating changes caused by the growth of molecular medicine. We discuss the scope of these changes in depth in a Perspective article in Future Medicine’s Personalized Medicine journal [1].

What is different about molecular medicine’s impact? Is it not just another technology that will make it possible to treat sick patients in a more successful manner and in a more individualized way within the traditional healthcare system? Our answer is that it is all of this and more. The ‘more’ is the important part.

Molecular medicine – especially quantitative molecular diagnostics – is changing healthcare markets in fundamental ways.

Why are these changes important to CEOs? While CEOs’ employees are doing their daily jobs and assuming that the future will, mostly, be like the past, the leaders of healthcare organizations should know better. Their organizations are facing changes in the basic assumptions on which their business models are based. The certainties of the 20th Century have changed. CEOs are facing increased vulnerabilities and opportunities.

What do we mean?

Vulnerability

Insurance companies set rates based on population statistics. Molecular diagnostics are increasingly giving patients information that allows individuals to select needed policies and reject those probably not needed. Reduced company revenues and greater payouts will follow.

Opportunity

Quantitative molecular diagnostics lend themselves to point-of-care usage. The more robust a molecular signature, the less need there is for interpretation by a specialist. Primary care physicians will be able to diagnose and treat more complicated diseases and will refer less, taking business from specialists.

Vulnerability

Consumers have access to their genetic information from sources outside the established healthcare system. The quality of this information will only get better. Patients will bring this information to their primary-care physicians, wanting a response. The primary-care physicians are not trained in genetics or genetic counseling, and their institutions are not reimbursed for the time spent in these discussions.

Opportunity

Consumer products companies can use science to develop products that take advantage of molecular medicine and allow the companies to differentiate themselves in their markets. Some of these can use simple molecular – not necessarily genetic – diagnostics to help consumers.

Vulnerability & opportunity

Molecular diagnostics are increasingly used to target (and thus limit markets for) therapies, and thereby reduce pharma’s chances at new blockbuster drugs. Pharma faces the prospect of new, untried business models, using companion diagnostics, with smaller revenues per therapy, in the hope of obtaining higher prices for therapies that have high probability of working for a subset of the patient population.

Opportunity & vulnerability

As biomarkers get better, and whole-genome scanning becomes a low-priced commodity, health and wellness businesses outside of the traditional healthcare system will emerge, some soundly based in science, some not.

How do these vulnerabilities & opportunities appear on your radar?

• • You are losing revenues; how do you replace them?

• • You see your competitors launching initiatives that you have not begun to put in place. You are worried that you will lose market share;

• • Your staff do not understand the situation. They actively resist change, preferring the comfort of past years’ ways of doing things;

• • Customer satisfaction results are getting worse and worse;

• • Some of your peers are taking jobs as heads of well-funded start-ups in related but new markets;

• • Your competitors are forming new partnerships that worry you;

• • Your staff lack knowledge they need to have. How retrainable are they? Which ones should be replaced?

What is a CEO to do?

First, a thing not to do. Do not think you will plan for dramatic, disruptive change by going through your standard annual budgeting process. You and any staff member who has been through the process knows what happens, what to submit and how to get a decent outcome. It is like a rep company playing Hamlet for the hundredth time. When you look backward for your process, you look backward for your outcome.

What is the key problem here? It is that it is much easier to look backward than forward – to assume tomorrow will be like today, that we will keep all the same business units and the same budgets and compensation plans, that our current staff is great and does not need upgrading, and that molecular diagnostics will affect markets, but years from now. There are many CEOs who will take this stand with the support of their boards. It is easy to look down on the new science and say it is not ready, or it does not fit the way you currently do business, or your managers do not embrace it. However, you can be sure that others are seeing the promise and pursuing it – those who do will be tomorrow’s leaders. There is little value in being yesterday’s leader and tomorrow’s follower.

Many CEOs have grown up in the healthcare system. They have strong skills; they competently handle difficult challenges every day. However, some of them seem to wear blindfolds. Planning for the future requires realism, pragmatism and an ability to see what is coming down the road. The future is full of opportunity and also some wrenching changes for many healthcare organizations. Yet some CEOs look at all of the signs of coming change and believe that these changes are not real – to be disdained because things were not done that way last year; outrageous because traditional healthcare roles will not change any time soon.

In this editorial, we have pointed out difficulties and the need to accept change. However, we believe that it is possible to implement change without disrupting your current business.

First, separate your strategic long-range planning from your next year’s budget process. This separation will keep you from having turf battles interfere with strategic decisions. Have a separate team work on your 2–3-year strategic planning. Keep the group small and select people who are not committed, either by ideology or by rich compensation plans, to the status quo. Pick people who are good thinkers and who are candidates to be leaders of new initiatives. Give this team plenty of your time and run it yourself. Reward them for being on the team. Demonstrate to the organization that strategic planning is valued.

Decide on your strategic goals – there are many possibilities, but consider growth, safety, service, survival, balance and leadership. Be realistic about your current situation and the resources you have available to invest in moving forward.

Go through exercises that free you from your day-to-day preoccupations. Build an understanding of where technology is going; what will be ready for market soon and what will not be. Invent competitors who could take significant market share from you; look around to see if they exist or may soon. Consider adjacent businesses – opportunities in growth areas that are near to what you do today. Look at other opportunities that would require new skill sets and consider acquiring those missing pieces.

Evaluate your organization’s core competencies. See what you need to pursue interesting opportunities and consider potential partners. Create top-five lists of possibilities, their requirements, timetables, triggers and competitor actions that help/harm these potential initiatives.

Go through these exercises once or twice a year. You may decide that no action is needed at present. That is fine, but you will be making that decision based on analysis, rather than complacency. Also, more likely, given the changing climate, you will find compelling opportunities that will allow you to build new strengths and differentiate you and your organization from the others in your field.

Financial & competing interests disclosure

The authors have no relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript. This includes employment, consultancies, honoraria, stock ownership or options, expert testimony, grants or patents received or pending, or royalties.

No writing assistance was utilized in the production of this manuscript.