Tuesday, November 12, 2013

Coherence Premium and Cleveland Clinic

According to "The Coherence Premium", sustainable and superior returns accrue to companies that focus on what they do best.  This is significant within the healthcare industry, and specifically to large health systems.  Hospital and health systems face tremendous market pressures to create value for shareholders and patients.  Political pressures force hospitals to respond to external conditions in ways that are detrimental to achieving 'superior' returns.  One health system in the United States does achieve sustainable and superior returns as a result of achieving 'coherence.'

 The Cleveland Clinic focuses on what they do best, which is providing innovative and effective care to its patients while empowering and educating its physicians.  Cleveland Clinic is world renowned for its core capabilities.  Its capabilities include: 1) providing coordinated care, 2) creating a patient-centered model of care, 3) enhancing the patient experience, 4) creating efficient processes and 5) enhancing the physician experience. 

The Cleveland Clinic has built its business so that its offerings are aligned with each of these core capabilities.  The Cleveland Clinic is a multidisciplinary, physician-run hospital system that offers a wide variety of medical services.  These medical services are aligned with its capabilities so that patients are placed at the center of their care, physicians work in multidisciplinary and 'coordinated care teams' and quality and safety are given the highest importance. 

Cleveland Clinic is very clear on how they create value in the marketplace.  It is known world wide for its efficient processes, quality improvement and lean initiatives.  Cleveland Clinic regularly participates in 'rapid improvement projects', which are a core tenet of the Toyota Production System.  Furthermore, patients come from all over the world to receive care in these patient-centered teams that Cleveland Clinic uses to coordinate care.

Lastly, Cleveland Clinic has specified its product (medical services) and service 'sweet spot'.  By using its core capabilities, Cleveland Clinic has emerged has an industry leader in delivering high quality care, utilizing preventive programs to reduce overall costs and developing innovative systems that reduce hospital re-admissions and over-utilization of high cost services.  

Cleveland Clinic has certainly passed the 'coherence test'.  Moving forward, it should ask, 'can we leverage our capabilities in new or unexpected areas?'  Can we leverage our capabilities to influence policies and industry trends? 

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