Deciding What’s Next

By Monica E. Oss, Chief Executive Officer, OPEN MINDS

New provider organizations, armed with new technology, are causing some shifts in the health care space. Retail players and virtual behavioral health companies are likely going to gain market share for treatment services for consumers with mild and moderate mental health conditions. This shift applies to chronic conditions as well. For specialty and primary care provider organizations serving these consumers, this shift is a threat to both growth and profitability.

At the same time, there is growing demand for services anchored in a “whole person” care approach to serving consumers with multiple comorbid conditions and high resource use. These services include specialty primary care, integrated medical/behavioral/social care coordination, urgent care response, specialty acute care programs for consumers with comorbid conditions, social support programs addressing social determinants of health, and more.

The big question for many management teams is how to best change their service line portfolio. How do you go from one set of services to another, managing both a changing service delivery process and financial sustainability? That was the focus of a recent OPEN MINDS Circle Executive Roundtable, How To Radically Re-Engineer Your Service Portfolio—Creating Innovative New Options, featuring Thomas Grant, Executive Vice President and Chief Financial Officer at Woods Services. Woods Services is a $400 million population management company with services in Pennsylvania and New Jersey for children and adults with intellectual disabilities, acquired brain injuries, and mental health needs.

Over a period of seven years, since 2016, Woods Services went from a stand-alone, $132 million specialty provider organization to a $400 million organization with eight affiliates providing a full range of integrated services—behavioral, physical, support, and social—for an estimated 22,000 children and adults with intellectual disabilities, acquired brain injuries, and /or mental health challenges who may also have complex medical and genetic conditions. The repositioning shifted Woods from a provider of discreet services to a population health management organization. To do this, Woods developed a model in which the affiliate organizations serve as subsidiaries of Woods and create an expansive service delivery system. The affiliates retain its own 501(c)(3) status and its own Board of Directors with fiduciary responsibility.

This evolution is the perfect example of strategic service line portfolio management—a process that combines portfolio alignment, in which programs are aligned with the organization’s long-term business goals. On-going portfolio management is an essential part of the planning process in any changing market. Yet in a recent survey, only 16% of executives thought their organization had an effective service portfolio strategy that could rate each service line on financial performance and strategic relevance.

Mr. Grant described this three-part process from the management perspective. “It’s really simple. Look at what you do. What are you deeply passionate about, what can you be the best in the world at, and what drives your economic engine? You really need to get all three. Getting everyone on your team to agree can be a big roadblock. Making sure you have the same foundation is very important.”

As executive teams evaluate their own portfolio management competencies, there are a few key ingredients to keep in mind. A first critical ingredient is a long-term vision for the organization. Without that long-term perspective, executives lack a key perspective for making current investment decisions.

The second is a strategic plan focused on growth and financial sustainability. In this changing market, provider organization executive teams need to adopt a new model of planning that allocates resources (both human and financial) to achieve mission, growth, and margin objectives.

Finally, the third is service line-specific data to evaluate the relative performance of each service. Without that specific granular data, evaluating and managing the performance of services is difficult.

But those tactical elements—vision, strategy, and service line data—will not have an impact without the leadership of an executive team willing to make the tough decisions promptly in a changing market. To quote business analyst Peter Drucker, “Whenever you see a successful business, someone once made a courageous decision.”