At 17 percent of the gross domestic product and growing, the healthcare industry represents a vast network of interconnected entities that deliver care, and process the finances, transactions and decisions associated with that care. Care is delivered across a wide array of locations hospitals, ancillary centers, ambulatory settings and in the home. Payment sources range from government through Medicare, Medicaid and the federal and military health programs, to employers through self-insured and insured products, and patients themselves. Traditional healthcare is further supplemented by a vast and growing alternative medicine and wellness/nutritionals sector.
Healthcare payments are handled through intermediaries who include health insurers, benefits administrators and consumer health providers across the medical, mental-health and pharmacy spectrum. The care itself is delivered by skilled clinicians, including physicians, nurses and a wide spectrum of ancillary care-givers – most of who are organized into small businesses that operate within the institutions listed above. The spectrum of providers who operate within this complex eco-system is vast and includes, but is not limited to:
- Health insurers and benefit administrators
- Pharmacy benefit managers and administrators
- Retail entities involved with the delivery of mobile, urgent and ambulatory care
- Alternative medicine providers and the nutritionals sector
- Hospitals and in-home care-givers
- Healthcare information technology providers and infomediaries
- Consultants who advise stakeholders across the spectrum
- Health 2.0 players who provide knowledge forums, social networks and advisory forums online
- Health and wellness players, disease managers and others seeking to predict, prevent and manage chronic disease
- Financial entities involved in the financing of healthcare, including asset players, benefits administrators and public and private investors.
The US health industry is certain to grow, rather than shrink, for decades to come – fueled by increasing demand for services against the backdrop of shrinking resources allocated to care. This pressure to reduce units of consumption and the cost of every unit of care is contributing to catastrophic conditions within each sub-sector listed above – causing a further imbalance between the demand for resources and their supply, between the costs of units consumed and the price the market is willing to pay for them.
For decades, this imbalance has been held at bay by growing investments of resources from all stakeholders – the government, private employers and private citizens. As employers and citizens reel under the burden, the government is stepping in to an even greater degree – leading to a downward pressure on unit prices unprecedented in recent times. Within the hospital sector, this shrinkage of operating profits comes alongside a serious shortage of capital. Within the caregiver segment, shortages of skilled labor are being exacerbated by cuts in teaching programs, reimbursement and aid. Within the insurance segment, micro-avoidance of risk has created a whole industry of care-rationing entities, all of whose actions create new cycles of care denial, lawsuits and scrutiny that further compromise quality and fuel the practice of defensive medicine.
As the stakeholders pit themselves against each other to grasp a disproportionate share of the pie, what the industry really needs are leaders who can lead through collaboration and influence; who can bring technology and operational excellence to bear on doing more with less; who can create functioning eco-systems within the chaotic backdrop of an industry where each patient is unique and true standardization is elusive.
What skills are needed now?
The functional skills needed within health services are the same as in many other health sectors – financial expertise, regulatory knowledge, technology skills, care-giving expertise and customer service skills. However, sector experience is often a critical adjunct, given the highly regulated and complex mosaic of processes unique to the industry. Our ability to identify leaders who have years of “in the box” experience but can bring an “out of the box” mindset to bear on this industry will be an important differentiator. As Capitol Hill becomes an increasing player in many other industries, those sectors are going to draw on health talent with expertise in working “the Hill” – resulting in a net outflow of talent from healthcare and further exacerbating the demand for talented executives in this sector. Our ability to maintain strong, resilient and current networks in each industry sub-sector ensures we can recruit high quality executives for our clients in a timely manner.
How can Egon Zehnder support the healthcare services industry?
In this business environment, best-practice companies ensure that the essential competencies are both present and being developed in their management teams. Egon Zehnder’s global Life Sciences Practice supports our clients’ needs through specific industry expertise, as well as knowledge of, and access to top management talent in the market.
We proactively identify leaders and high-potential talent in the sub-sectors defined above, working with our clients to identify creative ways to build the teams required to achieve their strategic objectives.
How we operate
Egon Zehnder partners with organizations to raise their level of talent. We work across the talent management continuum to provide search, assessment and development services. Our consultants were all experienced business leaders before entering our firm and can therefore understand your business problem when developing a talent solution for you.
Our Leadership Strategy Services Practice offers proven expertise in systematically evaluating and benchmarking companies’ existing management portfolio at both individual and team levels. This strategic approach to creating top-class management teams can only be realized with the backing of a company’s CEO and more particularly its board. Both need experience of leading their companies through turbulent times.
All of our Life Sciences Practice consultants acquired extensive professional experience in the healthcare industry before joining Egon Zehnder. This expertise is embedded in our global network. Our entire firm operates as a single profit center, which both encourages and rewards collaboration.