As the healthcare industry continues to transition from a fee-for-service to a fee-for-value model, each healthcare system continues to seek to recognize its own "tipping point." And each healthcare organization finds itself in a unique position, providing significant opportunities for consulting firms—with boutiques thriving.
As KCRA's team recently discovered in their latest research: Consulting to Healthcare Payers and Providers 2015: Alternative Care Models, the bottom line for consultancies is that every client situation is different; local knowledge is important and each market will demand different attention. The adage "when you've seen one market, you've seen one market" holds true here, and consultants are living it. Boutique consulting firms with local and care provider expertise bring unique perspective during this period of innovation.
Innovation Phase
Why do boutique firms shine here? The reality is that the healthcare industry, particularly on the provider side is in a relatively immature state. The move to value-based case is solidly in an innovation phase; and there is little standardization or mass execution of lessons learned and techniques.
While the larger firms including the Big 4 have vast "other industry" experience to draw from, benchmarking data, best practices, analytics and other tools; there are smaller, specialized firms in this arena such as The Advisory Board Company, The Camden Group, ECG Management Consultants, North Highland, Blue Consulting, Kurt Salmon, PA Consulting and BDC Advisors among others who are flourishing during the innovation phase. At this point, consultants are generally not bringing in armies, but rather, experienced senior personnel to drive the process. Much of the client demand is for consultants to act as the facilitator ensuring the necessary transitions including contract negotiating, physician alignment, talent acquisition, strong local relationships, even interim staffing. Additionally, these boutique consulting firms are led by experienced, seasoned consultants, many of whom are also physicians. They can come to the table with both medical and business backgrounds, a valued combination that affords the necessary business acumen to design new organization structures, as well as the physician background to relate to physician groups.
Longer Term—More Standardization
Over time, value-based pay and alternative care model approaches will likely become more systematized. Once more healthcare systems reach the tipping point and make large-scale commitments to fee-for-value models (for instance, moving from fee-for-value contracts to full-fledged vertical integration), different consulting capabilities will come into play. At that point, client implementations will require more horsepower from the consulting firms. Then larger consulting firms will really hit their stride because they have the resources to accommodate this type of growth.
Meeting broad demand may become tricky for the "innovator" group, the boutique consulting firms, to stay ahead of the game when the tide turns. Many in this group are rapidly building up through hiring and acquisitions, which will be required in the long run for them to compete effectively.
Evolving and emerging capabilities must be watched closely in line with market needs that continue to change on a daily basis. Adoption and innovation rule demand in 2015, enabling boutique firms to lead many grassroots initiatives. However, consultants must follow their own prescriptions going forward, and adapt to changing needs, which will necessitate transforming offerings and lead to potential new partners, in true "physician heal thyself" fashion.
Laura Becker is an Industry Analyst, Healthcare Consulting Research for KCRA.
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