Toward Convergence
In Chapter Two of the textbook, the authors Gray and Schlesinger take a necessarily lengthy approach to the exploration of the nonprofit health care industry. In particular they identify twelve major service domains that comprise the industry and then examine the role of nonprofits in each of these domains (or sub-sectors). The authors also highlight major challenges that nonprofits in the health care industry are facing, how the industry has responded to these challenges, and alternative approaches that nonprofits can use to protect their distinctive contributions.
My strongest reactions to this chapter were twofold. First, I am surprised to learn that 50% of the revenues of the entire nonprofit sector come from health service organizations. That statistic alone speaks to the importance of this industry. Second, I am a bit overwhelmed in my efforts to think in a clear and meaningful way about this industry that is so monolithic in scope yet organizationally heterogeneous. Health care easily interfaces with all aspects of our society and our world. The success or failure of it greatly impacts everything that we do.
I believe that if nonprofit health care is going to survive it must reengineer its business model to accommodate important partnerships, collaborations, and relationships that will sustain its growth over the long-term. The authors write about convergence as one of the ways in which the nonprofit sector is responding to the challenges. This is a sensible, logical and thoughtful solution that will reap many benefits for all. Some suggestions are:
1. I think it is time for us to shift the mental paradigms and the unrealistic expectations that continue to shape the health care industry in this country. Medical care is not a bottomless pit of free-flowing services underwritten by insurance premiums and government aid. We need to get a handle on the real costs and then identify creative solutions (a portfolio of revenue sources) to cover those costs.
2. Profit-making entities are not reliable over the long-term for owning health care domains. Profit-making entities are driven by profit and must answer to investors and stakeholders first and foremost. The business model within which they operate demands that once they cannot realize a certain percentage of profit, they cannot remain in the industry as an honest competitor. This means that they will eventually either exit the industry or practice fraudulent behaviors to remain in it. Profit-making entities should be looked to as possible partners or collaborators in the health care industry, but there is huge risk associated with any domain over which they dominate. Privatizing the provisions of specific goods and services to the for-profit sector seems feasible.
3. The health care industry must remain under the auspices of the non-profit sector because there are tremendous community benefits that must be provided by this industry. What’s more, the trustworthiness and professional values that are embodied in the nonprofit sector cannot be duplicated in the for-profit world.
4. Operating a non-profit entity should not be synonymous with poor business practices. Non-profits are granted a tax-exempt status. This does not mean that they cannot adopt some of the sound business practices that are used in corporate America. The authors advise that nonprofits must become a commercial success if they are going to survive in health care. Sound business practices are the map to commercial success.
5. The health care industry is dynamic. Change is inevitable and constant. Non-profits must seek to keep up with those changes.
My strongest reactions to this chapter were twofold. First, I am surprised to learn that 50% of the revenues of the entire nonprofit sector come from health service organizations. That statistic alone speaks to the importance of this industry. Second, I am a bit overwhelmed in my efforts to think in a clear and meaningful way about this industry that is so monolithic in scope yet organizationally heterogeneous. Health care easily interfaces with all aspects of our society and our world. The success or failure of it greatly impacts everything that we do.
I believe that if nonprofit health care is going to survive it must reengineer its business model to accommodate important partnerships, collaborations, and relationships that will sustain its growth over the long-term. The authors write about convergence as one of the ways in which the nonprofit sector is responding to the challenges. This is a sensible, logical and thoughtful solution that will reap many benefits for all. Some suggestions are:
1. I think it is time for us to shift the mental paradigms and the unrealistic expectations that continue to shape the health care industry in this country. Medical care is not a bottomless pit of free-flowing services underwritten by insurance premiums and government aid. We need to get a handle on the real costs and then identify creative solutions (a portfolio of revenue sources) to cover those costs.
2. Profit-making entities are not reliable over the long-term for owning health care domains. Profit-making entities are driven by profit and must answer to investors and stakeholders first and foremost. The business model within which they operate demands that once they cannot realize a certain percentage of profit, they cannot remain in the industry as an honest competitor. This means that they will eventually either exit the industry or practice fraudulent behaviors to remain in it. Profit-making entities should be looked to as possible partners or collaborators in the health care industry, but there is huge risk associated with any domain over which they dominate. Privatizing the provisions of specific goods and services to the for-profit sector seems feasible.
3. The health care industry must remain under the auspices of the non-profit sector because there are tremendous community benefits that must be provided by this industry. What’s more, the trustworthiness and professional values that are embodied in the nonprofit sector cannot be duplicated in the for-profit world.
4. Operating a non-profit entity should not be synonymous with poor business practices. Non-profits are granted a tax-exempt status. This does not mean that they cannot adopt some of the sound business practices that are used in corporate America. The authors advise that nonprofits must become a commercial success if they are going to survive in health care. Sound business practices are the map to commercial success.
5. The health care industry is dynamic. Change is inevitable and constant. Non-profits must seek to keep up with those changes.
posted by Anonymous @ 12:22 PM
1 Comments:
At 5:56 PM, September 04, 2006,
Paul Jonas said…
Gina's post and much of Gray and Schlesinger rings true to my experience. Many of you know that I work at Haven Hospice, but that was only half my week. I spent another 20 hours a week developing a scholarship for a rural healthcare non-profit. When I read the words "paradox" in the chapter and see Gina's use of the phrase "organizationally heterogeneous" I am reminded that I lived it over this summer.
One of my internships afforded me the opportunity to see an organization struggling to draw that line and for the most part succeeding. The other showed me what can happen as far as organizational effectiveness when there is no struggle within the organization to define itself.
On one hand a successful organization is continuously growing and changing and for that reason it is more able and prepared for change in the future. Decisions are made quickly and they are carried out once settled upon. This commitment in the past has lead to a comfortable position and and established identity for the organization as an important part of the Gainesvile community.
On the other hand an organization that lacks in decision-making, in the struggle for self definition, lacks in its ability to define itself and therefore is not as apt at becoming a successful community partner.
Gina suggests a reengineering of non-profit healthcares business model. Business plans are tough to draw up for non-profit healthcare because the bottom line in the minds of most people running NPOs is not a double-line above a dollar sign. Having a "good" business plan vs. providing the best care possible to each and every patient often conflict. Creating a business model that works and then sticking to it is very important for NPOs: Especially because they are riding on the backs of donors and fundraising can be less predictable than sales and profit, which can make all the difference when government funding is scarce or likely to change.
While it may not seem like the most humane thing to do, it is important for non-profits to draw distinct lines and define their actions and purposes as clearly as possible. Like any good contract, this ensures that they are very clear on what they will provide and won't provide and hopefully neither provider nor patient ends up getting/feeling screwed.
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