A New Era of Tight Capacity, Part 3 of a 3-Part Series

By Jeff Terry

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In part 3 of this series blog: Mike Donoghue interviews Jeff Terry.

Mike, I agree. The entire country seems frustrated by the enormity of the challenge of reforming health care and worn down by the contentiousness of the political debate. It has become all-consuming. But amidst the rancor, at GE we see great opportunity. Many of the endowments needed to reform care are already in place, and they are extraordinary - beginning with the best-trained and most talented workforce of any industry in the world. As an industry, our charge is to put all of these extraordinary resources to their highest-valued use.

Toward that end, this white paper does three things:

First, it spells out the macroeconomic and political forces that have converged to finally force meaningful change in the way that we approach health care capacity. Thus, for example, the paper explains in simple terms how, after four decades of robust growth, the US-trained physician workforce is reaching a steady state. It has stopped growing just as the baby boom generation is beginning to retire and as thirty million newly insured Americans gain real access to care. There have been plans under way since the middle of the last decade to increase the number of medical school graduates, but the effort is a bit behind schedule and under the best case scenario, a meaningful increase in the number of physicians is a decade or more off in the future. As such, over time we must dramatically improve the productivity of the entire healthcare workforce, for the simple reason that for now its capacity is essentially fixed.

Second, it provides a simple healthcare management primer. It explains the economics of fixed costs in basic and intuitive terms, with applications to specific health care settings. It does this in ways that we think enhance understanding and at the same time provide guidance. We hope and trust that it will be a useful introduction even for those who have never before had any grounding in these basic management principles, and that it will both enhance understanding and spark useful discussions.

Third, it is a call to action. The industry has for too long pushed across-the-board, indiscriminate, and brute force methods for containing costs, and by all accounts they have failed. We assert here that the biggest reason for this failure derives from the fact that the bulk of health care costs come not from utilizing our already installed health care infrastructure, but rather from building that infrastructure and maintaining it at the ready. We can be far better stewards of these extraordinary endowments, providing better care at lower cost and with greater patient and caregiver satisfaction. Indeed, we see more effective stewardship of capacity as the only way to get a handle on this industry's fundamental problems.

Mike, David, and I enjoyed putting this paper together. We hope others enjoy reading it and putting it to good use.

"A New Era of Tight Capacity" Blog Links:
A New Era of Tight Capacity, Part 1 of a 3-Part Series
A New Era of Tight Capacity, Part 2 of a 3-Part Series

For More Information
White Paper: Management 201: A New Era Of Tight Capacity
Poll: Why Is It Difficult To Find Beds For Patients In Your Hospital
Self Assessment Tool: Capacity Optimizer Tool


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