Healthcare Innovation Is Best Response to Industry Disruption, Say CEOs

June 14, 2019 - A majority of C-suite executives identified healthcare innovation as the best response to industry disruption, according to the annual healthcare CEO survey by the Advisory Board.

The interest in innovation shows that health organizations are seeing intensifying pressures and competition from new entrants into the healthcare market, particularly Silicon Valley firms, big tech companies, and private equity firms, the board observed.

In addition, the top five areas of interest from the C-suite executives are improving ambulatory access, minimizing unwarranted clinical variation, strengthening primary care alignment, redesigning health system services for population health, and innovative approaches to expense reduction.

“Health systems have not given up their keen eye on improving cost control, and yet C-suite executives recognize the need for comprehensive margin management strategies that include revenue growth,” said Christopher Kerns, executive director of research at the Advisory Board. “Balanced strategies are the key to achieving financial viability and securing the strategic flexibility necessary to respond to new market entrants and disruptors.”

The Advisory Board surveyed 90 C-suite healthcare executives in the United States between January and March 2019.

The board highlighted four key takeaways from the survey:

• Healthcare executives’ top priority has shifted from cost control to revenue growth
• Healthcare executives are looking beyond the hospital to capture new revenue growth
• Physicians will be critical to margin management efforts across the board
• Innovation is becoming the key response to industry disruption

The C-suite executives were also asked to name their top priority among high-level categories. Revenue growth led at 21 percent, followed by population health and accountable care organization strategy (20 percent).

There was a three-way tie for third at 13 percent among cost containment, physician network alignment, and systemness, which means efforts to streamline operations, deliver more reliable and coordinated care, rationalize fixed costs, and transform entire business models.

“Executives are more interested in moving upstream to capture revenue growth through ambulatory access and primary care, rather than traditional strategies of boosting hospital market share,” said Yulan Egan, practice manager for research at the Advisory Board.