Two Products, Two Worlds
Intermountain stays competitive by shape shifting
In 2018, Intermountain Healthcare reorganized. Their formerly geographic / regional structure was replaced with two groups:
Community Care, which is essentially primary care. Regular check-ups and screenings, plus ongoing management of chronic diseases, almost entirely on an outpatient basis.
Specialty Care, which is for very sick patients that need acute treatments. Think heart surgery, cancer treatment, and emergency services.
(Intermountain operates an insurance business as well, so they’re vertically integrated, and that structure is not changing.)
Re-organizing like this is difficult and costly. Jobs are lost or moved, reporting relationships change, and employees have to find new ways of accomplishing basic tasks. So why do it?
Thinking from the patient’s perspective, they are buying a single product from Intermountain, which is health care. But Intermountain’s new structure recognizes that health care is really a bundle of two distinct products—primary care and specialty care. And in organizing around those two things, Intermountain is betting it can bring its resources to bear more effectively.
Comparing the Specialty and Community Worlds
Consider the incentives for a team of doctors/nurses/managers on the specialty side:
Their measurement of success is relatively easy to see: the survival rates of patients receiving surgeries, average days before discharge, readmission rates, and so on.
Specialty care is highly differentiated according to how advanced the treatments are. Convenience matters little; patients travel to new cities if the situation is dire enough. When it’s a matter of life or death, only the very best will do.
Costs are high, and highly irregular. A heart attack doesn’t happen often, but it’s expensive to treat.
Delivery of care is typically centralized at a hospital that can afford the overhead in expensive, heavy equipment requited for advanced treatments.
On the primary care side:
Measuring success is hard, because feedback loops are long. Screenings, vaccinations, and blood work don’t provide immediately benefits. Instead, a problem that would have arisen 5 years hence might be delayed to 10 years. That’s a big deal, but it’s abstract. Success is only observable at the population level—how many patients develop chronic conditions?—and needs to be incented as such.
Customer experience matters a lot in primary care. Convenience and comfort keep patients engaged, while poor experiences will push them away, possibly to competitors. The reason the experience matters so much is that the care is relatively simple and commoditized, as opposed to highly advanced like specialty care.
Costs are generally low, regular and predictable. Insurance is almost not needed (at least for the traditional function of risk pooling—it serves other functions).
Delivery of care is spread out into the community in many small offices and store fronts, close to residential areas that get maximum community engagement. Virtual doctor visits are often viable.
Separate Points of Focus
With these differences in mind, it becomes easy to see how mixing the two models creates focus. A regional manager that wants to provide more advanced care, for example, is only helping the specialty side of her business, while her colleague trying to improve the patient experience helps only the primary care side of his. As another example, to incent a brilliant surgeon on a population-level metric from the primary care world makes no sense.
Finally, under the regional structure, it’s too easy for clinics to compete with hospitals over resources and patients.
Costs and Tradeoffs
Any structural decision requires tradeoffs, and there are two pertinent ones in this case:
A geographic structure makes sense when there are real geographic differences that affect the business. It becomes harder to adapt to the nuances of different communities (e.g. urban vs rural communities) without the regional structure
Patients will mostly engage with primary care, but inevitably there will be some engagement with the specialty care as well, often in a time of crisis. When that happens, there is potential friction in suddenly being handed off to a separate organization. Intermountain will be used to doing this with patients, but the company will require extra focus to coordinate care for a single patient across the two verticals.
The first of those tradeoffs seems not to be much of a barrier (Intermountain operates mostly in a single state—Utah). The second is an execution risk but addressable. On the whole, the benefits would seem to outweigh the costs.
Competing in Primary Care
One last point about distribution: Intermountain is looking to innovate in the way it delivers primary care, via telemedicine, a virtual hospital, etc., and they’ve hired a customer experience expert as a ‘Chief Consumer Officer’ to do it. This focus is absolutely critical when considering the efforts of e.g. CVS which is building out its primary care network, and United, which is doing something similar via Optum. As noted above, primary care is highly commoditized, so solving for the best experience becomes paramount. Intermountain should find themselves in a better place to do that now.
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