Finding the Cure

Newer players are expanding their healthcare expertise to meet the growing demands of this $2 trillion U.S. industry. Tata Consultancy Services has been ramping up its healthcare offerings in its Global Consulting Practice over the past few years by hiring several senior consultants with backgrounds in pharmaceuticals, biotech, medical devices, providers and payers and government initiatives, such as universal healthcare and healthcare information technology. Its growing client list includes Eli Lily, GlaxoSmithKline and Kimberly-Clark. Whether consulting expertise lies with healthcare providers, insurers, medical device manufacturers or pharmaceuticals, there's no shortage of consulting challenges in the sector.

Today's pains: rising costs, inconsistent care and uninsured patients
At any given time, almost one-third of the nation's 4,500 hospitals face financial troubles due to regulatory changes, Medicaid and Medicare funding and a growing number of uninsured patients. The cost of uncompensated care was estimated at about $41 billion in 2004, according to the National Association of Public Hospitals and Health Systems.

Hospitals need to find ways toward improving their fiscal bottom line, such as reducing expenses or enhancing revenue, says James H. Roth, vice president of the health and education consulting team at Huron Consulting Group in Chicago. That could be accomplished through an evaluation of supply chain or revenue cycles, or even interim management.

"Some of the hospitals that we've worked with that are smaller communities are the sole provider of healthcare to their region. Yet they don't control the state's ability to provide funding to them for Medicaid, and Medicare reimbursement is slower as well," Roth says. "These are patterns all across the country. Yet you can't shut down. Something has got to change, and we help them make those changes."

Huron works with 60 of the nation's leading research universities and academic medical centers to help them streamline operations and reduce costs through all business areas. That includes financial, operational, sourcing, strategic and technology solutions. At one institution, the team is helping administrators determine whether they should acquire a medical school. At another university, Huron is helping the campus identify ways to increase revenue and reduce expenses across all the facilities and components of the university. In the hospital's research area, the group is running the research administration for a university, and helping another college restructure and better manage its clinical research enterprise, while improving the technology delivered to the research enterprise.

Tomorrow's challenges: "Retail" healthcare
In many U.S. cities, residents can walk into a local pharmacy and be treated by a nurse practitioner for everything from strep throat to an upper respiratory infection. They also administer preventative services, including health screenings, medical tests, vaccinations and basic physical exams. No appointment necessary.

Mark Wietecha, chairman of Kurt Salmon Associates, says that the retail model in healthcare is becoming the norm. "The chief thing going on relative to consumers right now is to make the healthcare encounter, the experience, friendlier. Consumerism is on the rise in healthcare pretty dramatically. It's not just the current generation of people who expects to have more of a retail experience." Wietecha says that his firm is working with many different hospital systems to create that experience for patients, adding that oftentimes upgrades such as a light-filled lobby, ample parking and intuitively laid out offices help patients feel less stressed and better able to heal.

Even non-traditional players are getting in on the healthcare boom. In June, Google announced formation of its HealthCare Advisory Council "to help us better understand the problems consumers and providers face every day and offer feedback on product ideas and development," said product marketing manager Missy Krasner in a Google blog.

While the explosion of healthcare consumerism spells good news for patients, it's also creating strategic challenges for the healthcare sector, "which I think is a good thing," says Diane Davies, a Deloitte principal with 16 years in the firm's healthcare practice. "With more convergence of health and wealth, and more emphasis on wellness in a retail sense, it's forcing the healthcare industry to come up to speed in areas that were lagging before around technology, operations and customer service."

Deloitte has helped its healthcare clients partner with retail entities or to develop strategies to compete against them, Davies says. The firm is also helping clients with transformation projects that encompass strategy, operations and technology and change management to better compete in the new retail-health environment.

On the strategy side, Booz Allen Hamilton believes that a true retail healthcare market requires consumers, payers and suppliers to move forward together. "To make competition and innovation among payers and suppliers possible, the system will require… consumers who live healthy lives and plan for their future health-care needs; a fundamentally restructured supply side that provides consumers all the information they need to make wise choices and is quick to respond to changing consumer demands; and new kinds of intermediaries… to help align the supply and demand sides and help consumers navigate the complex system," according to David Knott, Gary Ahlquist and Rick Edmunds, co-authors of a BAH article called "Health Care's Retail Solution."

"There is tremendous potential for those players who empower consumers in this arrangement, with information, tools, and services that help them take control of their healthcare immediately and in the future," the article reads. "None of the three—consumers, payers, or suppliers—can drive the changes alone."

For consultants to the healthcare industry, that will require helping clients to develop new strategies, reshape the supply side, and implement technologies that offer transparency, innovation and connectivity. The market is evolving quickly and certainly. These shifts will create enormous opportunities for consulting firms that are prepared.