Competitive Case of the Week: Joint Replacement Center

Even 'hospitals of the future' that successfully (and quickly) reorient themselves around patient and physician centric business practices will face pressure from increasingly creative new H/HC business models.

Highly specialized ambulatory care/surgical centers are just one example.

Here's a sample business case to provide food for thought.

Three of your top orthopods announce they are leaving the hospital to start a specialized joint replacement center located 21 miles from your facility. They have not yet announced a partnership with a hospital (yours or a friendly competitor).

Their planned model is somewhat similar to a local maxillofacial surgery center and a laser vision eye center.

After being notified of their resignations, but prior to impending press coverage in the local newspaper, you talk over the coming defection during a meeting with your Chief Medical Officer, who seems a bit concerned.

You ask the CMO to elaborate, as you know only one of the docs personally from prior BOD involvement.

These docs are well-established within your community, have ties to nonprofit organizations, volunteer on committees, and one is a former Board member.

In addition, two enjoy reputations as being 'top' in their field locally - one renowned for sports medicine and 'weekend warrior' surgeries and the other for garnering rave reviews performing hip and knee replacement surgeries on the "55 alive" patient segment. This doc's careful and considerate treatment of geriatric patients and the time she spends with families is remarked upon by both the medical and nursing staff.

The third is a newer doc who has only been on staff at your hospital for 2 years, but is extremely active (you know he's a marathon runner) and has a good reputation. Last year he had a bit of a conflict with one of your more territorial physicians, and your CMO thought the issue had been smoothed over with few lasting effects.

The docs have leased space, hired office staff (including some people they worked with in your hospital), and secured forthcoming press coverage touting the speed and quality of care patients will find at New Hope Joint Replacement Center.

They're offering 'after hours' care by staggering shifts, have hired 3 PAs and 2 Nurse Practitioners (one from your staff, one recruited from a large regional Academic Medical Center), and have Saturday appointments. For an extra fee, patients can arrange for transportation to and from the center so they don't have to drive after procedures or rely upon a family member/friend.

Their reception area design drawings mirror the look/feel of a four-star hotel lobby, and the front desk area is staffed with a receptionist, concierge, and patient advocate (who is also an LPN). Guest registration occurs in small private rooms off the central reception area.

Following registration, each patient is introduced to his/her Dream Team - the doc, the NP/PA, the anesthesiologist (or nurse anesthetist), RN, and CNA who will be responsible for wellness management during their stay. All are present for the preop meeting, unless the patient specifically requests other arrangements.

They've partnered with a minute (retail) clinic chain to provide pharmacy services. The clinic will be located next door, and the two facilities are conjoined like Siamese twins - the pharmacy portion acts as a portal through which patients and their families can access the clinic portion, where they can obtain preoperative exams and other simplistic assessments.

They have also partnered with a local physical therapy provider which occupies space in the same leasing complex.

How do you handle the announcement? How would you position your hospital relative to the New Hope Joint Replacement Center - as competitor or partner?

What internal resources and information do you utilize as you explore a partnership with the doctors and New Hope Center? What immediate actions do you take to broach the subject of a potential partnership?

Do you consider waiting a year to see if the business model bears low-hanging fruit and begin planning an offer to acquire the facility?

How do you mobilize the hospital's public relations, communications, and marketing team to handle a 'counter' message?

How do you feel when faced with the additional information about how New Hope will operate (which is, by the way, probably far more competitive data than you'd realistically be able to gather prior to in-depth partnership talks)? Threatened? Curious?

Do you believe they have a chance of success, and act accordingly, or begin by trying to shut them down, criticizing their model immediately to a variety of audiences ?