Asset Lite and How Health Systems Can Cut Calories

So, you’re a health system and you’re trying to lose weight.  You can’t just stop eating pie after dinner, you have to make some tough decisions.  Layoffs, salary cuts, no bonuses for a year, reduce travel, squeeze your vendors – there are some options but many of them are unwelcome (or have already been done).  So where do you go from here?

I had a great conversation with an industry leader a few days ago that resulted in this quote from him, Asset Lite.  How do you become asset lite, whereas the craze from a few years ago was an arms race for every service line to compete with other health systems which resulted in everyone being asset heavy.  In many of my conversations from across the country, I am hearing health systems talk about cutting millions, if not billions, in redundant technologies.  How did things shift so quickly to this new asset lite mind set?

First, there are only so many cases per community.  With medical devices becoming more procedure specific we are seeing health systems buying the same technologies but for the same cases – in the end the technology cannot drive more cases, there is only so much volume.  So these redundant purchases in the community drive up costs with no way to make the ROI projections, meaning someone has to lose or everyone loses together, there is no win-win-win scenario.

Getting to asset lite does not just mean within a health system. At Cohealo we believe a community can focus on becoming asset lite, making sure that there are enough devices within the community to service the case load appropriately but without each hospital having to make a purchase to win the case.  If the community can work together to fulfill the caseload with shared assets, we can create the win-win-win.  It’s very much like the ACO model that is becoming the norm today, health systems that compete are working together to ensure value is the focus and not just volume.  In the case of easing the financial burden on each hospital independently, Cohealo drives the purchase and consumption discussion from a community basis.  This allows each hospital to spend appropriately against their expected and realized return on that spend.

Effectively managed capital equipment purchases across a community of competing hospitals – let that sink in for a minute.  It’s tough, I know… but change is tough and sometimes the unique and unseen opportunities deliver the most benefit.  Healthcare is getting outside the box – change is not only inevitable but it is going to be big change, not just small tweaks.