Chris Oleksy, Founder and CEO, Oleksy Enterprises and Next Life Medical; CEO, Emergent Respiratory11.07.17
It’s been a fascinating year for healthcare-related supply/value/care chains. To mark its passage, I’ve pulled together several column topics from the past 11 months and applied them to a prediction I made at the recent MPO Summit 2017 (I’ll repeat it for those unable to attend the event). Regardless of whether my forecast materializes, there are many teachable moments that can be applied no matter where you fall in the healthcare supply/value/care chain.
January/February 2017
In my first column of 2017, I highlighted the difference between supply chain cost focus vs. care chain patient focus. I advised President Donald Trump and the GOP-dominated Congress to tread carefully on healthcare reform, otherwise their efforts would fail and the country could be subjected to a different version of the Affordable Care Act under different leadership. I suggested then, and continue to do so now, that our healthcare system must be configured by true healthcare experts rather than those that only know Washington. Alas, my prediction came true: In September, former U.S. Sen. Tom Price resigned as U.S. Health and Human Services Secretary over taxpayer-funded jet rides, and senators still brooding over failed White House bids to hold the healthcare system hostage.
Teachable Moment No. 1: How we configure our organization’s supply/value/care chains demands sophistication that requires trained experts. Shouldn’t the same be said for our nation’s healthcare system? We must assemble healthcare supply/value/care chain experts to craft a solution that truly improves the system and lowers costs. What actually has transpired is akin to putting me in charge of creating a supply chain configuration that only supports my bank account at the expense of others. Not a good idea.
May 2017
In May, I highlighted the importance of following a structured tiered approach to the configuration of an organization’s supply/value/care chains. I suggested that companies become fluent in and comfortable with the OE-Tier 5 approach, a fundamental supply chain strategy I’ve used in my consulting practice for years.
Tier 1: Business Direction: Where do you want to go?
Tier 2: Configuration: “Configure” your supply chain(s) to realize your business direction.
Tier 3: Actions: Who will do what; when; where; how; etc.
Tier 4: Metrics: You get what you measure, so measure what you want to get.
Tier 5: Talent: The leaders/team that will get you there and the strategy used to achieve that goal.
Whether you are reading this column as an equity manager searching for a suitable healthcare investment; a supply chain manager looking to work with an OEM or contract manufacturer; or a hospital administrator determining the best supply chain management strategy for your facility, all of us need to configure our chains in a hierarchical manner. Jumping over tiers will lead to less-than-optimal configurations and could ultimately cripple an organization. Sometimes companies jump tiers for the sole purpose of applying the managerial configuration method of ready-fire-aim. I’m not a proponent of that approach. In my experience, the ready-fire-aim strategy creates chaos that is disruptive and difficult to manage. I truly believe that Obamacare was a decent Tier 1 business direction; however, a misguided Tier 2 configuration set into motion misguided Tier 3 actions, and it contained no Tier 4 metrics other than possible votes. Worst of all, it was configured by those that were not “in the know” (Tier 5).
Teachable Moment No. 2: All organizations, including Washington, must follow a tiered approach and not simply skip Tiers to actions. A recent example of this is President Trump’s mid-October executive order to end subsidies within Obamacare. This may be a solid Tier 3 action, but I would need details about the two previous tiers to be sure. Without a solid understanding of the Trump administration’s direction for the nation’s healthcare system, and a configuration for accomplishing the task, I can’t say whether the current (Tier 3) approach is aligned. In the absence of Tier 5 Talent (Congress), which is what I described in Teachable Moment No. 1 from January, we are now skipping the first two tiers and jumping to Tier 3 actions—the classic ready-fire-aim approach.
September 2017
In September, I paralleled the healthcare space to that of the financial/banking space and detailed the consequences of throwing normal business cycles off track with creativity (remember the 2008 financial crisis?). I described three cycles—product leadership, customer intimacy, and operational excellence—utilizing the lexicon from Michael Treacy and Fred Wiersema’s 1995 book “The Discipline of Market Leaders.” Although their lexicon was not designed with this illustration in mind, it nevertheless accurately describes current events. Healthcare appears to be mimicking cycles similar to that of the banking/finance industry, and if we’re not careful, we’ll create a similar pandemic/crisis in healthcare.
As we navigate Washington’s actions, it is imperative that we avoid getting too “creative” in our supply/value chain solutions. Case in point: Lehman Brothers’ creativity not only bankrupted the organization, but started a worldwide financial pandemic (according to some experts). I urged organizations in my September column to apply the adage “measure twice, cut once.”
Teachable Moment No. 3: Depending on where an organization exists in the healthcare supply/care/value chain, executives must avoid getting so creative that they rob Peter to pay Paul. Attempting to solve one problem can easily create others. This is exactly what happened with both Lehman Brothers and Obamacare. In an effort to create “healthcare for all,”—a business direction with considerable merit—misguided configurations have created a ballooning problem of rising premiums, poor payor options, loss of care choice, etc. I know I’ve mentioned this before, but it bears repeating: Regardless of where an organization exists in the care chain, executives should measure many times before they cut.
October 2017
At the MPO Summit 2017 in San Diego, Calif., I built upon my September column and presented what we can learn from comparing the banking/financial industry’s cycles and creativity to that of healthcare. Many similarities appear to currently be in motion. My goal at the Summit, as well as in all of my columns, is to help organizations correctly configure their supply/value/care chains regardless of the direction of healthcare reform.
At the Summit, I suggested that Obamacare’s business direction and Washington’s failure to work together could lead to the insolvency of our payor system and create a pandemic. Why?
Preventing the free enterprise system from “doing its thing” will create a single-payor system managed by career bureaucrats. Not the best choice, in my opinion. I prefer the free enterprise approach that Medtronic Founder Earl Bakken and Zoll Medical Founder Paul Zoll used to create and seed some of the best therapies known to man.
Teachable Moment No. 4: As we have done for more than 200 years, we should allow the free enterprise system to “do its thing.” But, here’s a novel idea: If Washington wants to help, it should create incentives rather than punishments (i.e., medical device excise tax). Barring any last-minute legislative bailouts, there almost certainly may be a familiar line item on invoices across the nation reading, “Affordable Care Act Excise Tax.”
2017 Conclusion
Regardless of Obamacare’s fate, I hope my columns this year have given you the insight, tools, and techniques to help successfully navigate (configure) where you might be headed.
I’m going to conclude this year’s columns with a quote from another one of my favorite movies—“Remember the Titans.” Based on a true story, the movie highlights how opinions on opposite sides of polarizing issues (like healthcare) can come together for the good of the whole. We need Washington to watch this movie and study what the quote “left side…strong side” really means. It’s a football analogy that works towards the alignment of positions—similar to the hierarchical alignment I have spoken of often this year. So please, if anyone in Washington is reading this, remember “left side…strong side”
We need to rally for healthcare, whether it be for wellness or treatment of existing conditions. Washington needs to enable and incent the most economic powerhouse in the world to utilize its free enterprise system to compete and ultimately create a healthcare system that is sustainable and affordable. It needs to be incented, not controlled.
We’ve seen our nation rally before. We can and will again. Until then, I’ll just keep learning from my movies as I await Washington’s call for help. And if it ever comes, I’ll be there in a New York minute to help. How about you?
Chris Oleksy is founder and CEO of Oleksy Enterprises, Next Life Medical, and Emergent Respiratory. He can be reached at chris@oleksyenterprises.com or chris@nextlifemedical.com.
January/February 2017
In my first column of 2017, I highlighted the difference between supply chain cost focus vs. care chain patient focus. I advised President Donald Trump and the GOP-dominated Congress to tread carefully on healthcare reform, otherwise their efforts would fail and the country could be subjected to a different version of the Affordable Care Act under different leadership. I suggested then, and continue to do so now, that our healthcare system must be configured by true healthcare experts rather than those that only know Washington. Alas, my prediction came true: In September, former U.S. Sen. Tom Price resigned as U.S. Health and Human Services Secretary over taxpayer-funded jet rides, and senators still brooding over failed White House bids to hold the healthcare system hostage.
Teachable Moment No. 1: How we configure our organization’s supply/value/care chains demands sophistication that requires trained experts. Shouldn’t the same be said for our nation’s healthcare system? We must assemble healthcare supply/value/care chain experts to craft a solution that truly improves the system and lowers costs. What actually has transpired is akin to putting me in charge of creating a supply chain configuration that only supports my bank account at the expense of others. Not a good idea.
May 2017
In May, I highlighted the importance of following a structured tiered approach to the configuration of an organization’s supply/value/care chains. I suggested that companies become fluent in and comfortable with the OE-Tier 5 approach, a fundamental supply chain strategy I’ve used in my consulting practice for years.
Tier 1: Business Direction: Where do you want to go?
Tier 2: Configuration: “Configure” your supply chain(s) to realize your business direction.
Tier 3: Actions: Who will do what; when; where; how; etc.
Tier 4: Metrics: You get what you measure, so measure what you want to get.
Tier 5: Talent: The leaders/team that will get you there and the strategy used to achieve that goal.
Whether you are reading this column as an equity manager searching for a suitable healthcare investment; a supply chain manager looking to work with an OEM or contract manufacturer; or a hospital administrator determining the best supply chain management strategy for your facility, all of us need to configure our chains in a hierarchical manner. Jumping over tiers will lead to less-than-optimal configurations and could ultimately cripple an organization. Sometimes companies jump tiers for the sole purpose of applying the managerial configuration method of ready-fire-aim. I’m not a proponent of that approach. In my experience, the ready-fire-aim strategy creates chaos that is disruptive and difficult to manage. I truly believe that Obamacare was a decent Tier 1 business direction; however, a misguided Tier 2 configuration set into motion misguided Tier 3 actions, and it contained no Tier 4 metrics other than possible votes. Worst of all, it was configured by those that were not “in the know” (Tier 5).
Teachable Moment No. 2: All organizations, including Washington, must follow a tiered approach and not simply skip Tiers to actions. A recent example of this is President Trump’s mid-October executive order to end subsidies within Obamacare. This may be a solid Tier 3 action, but I would need details about the two previous tiers to be sure. Without a solid understanding of the Trump administration’s direction for the nation’s healthcare system, and a configuration for accomplishing the task, I can’t say whether the current (Tier 3) approach is aligned. In the absence of Tier 5 Talent (Congress), which is what I described in Teachable Moment No. 1 from January, we are now skipping the first two tiers and jumping to Tier 3 actions—the classic ready-fire-aim approach.
September 2017
In September, I paralleled the healthcare space to that of the financial/banking space and detailed the consequences of throwing normal business cycles off track with creativity (remember the 2008 financial crisis?). I described three cycles—product leadership, customer intimacy, and operational excellence—utilizing the lexicon from Michael Treacy and Fred Wiersema’s 1995 book “The Discipline of Market Leaders.” Although their lexicon was not designed with this illustration in mind, it nevertheless accurately describes current events. Healthcare appears to be mimicking cycles similar to that of the banking/finance industry, and if we’re not careful, we’ll create a similar pandemic/crisis in healthcare.
As we navigate Washington’s actions, it is imperative that we avoid getting too “creative” in our supply/value chain solutions. Case in point: Lehman Brothers’ creativity not only bankrupted the organization, but started a worldwide financial pandemic (according to some experts). I urged organizations in my September column to apply the adage “measure twice, cut once.”
Teachable Moment No. 3: Depending on where an organization exists in the healthcare supply/care/value chain, executives must avoid getting so creative that they rob Peter to pay Paul. Attempting to solve one problem can easily create others. This is exactly what happened with both Lehman Brothers and Obamacare. In an effort to create “healthcare for all,”—a business direction with considerable merit—misguided configurations have created a ballooning problem of rising premiums, poor payor options, loss of care choice, etc. I know I’ve mentioned this before, but it bears repeating: Regardless of where an organization exists in the care chain, executives should measure many times before they cut.
October 2017
At the MPO Summit 2017 in San Diego, Calif., I built upon my September column and presented what we can learn from comparing the banking/financial industry’s cycles and creativity to that of healthcare. Many similarities appear to currently be in motion. My goal at the Summit, as well as in all of my columns, is to help organizations correctly configure their supply/value/care chains regardless of the direction of healthcare reform.
At the Summit, I suggested that Obamacare’s business direction and Washington’s failure to work together could lead to the insolvency of our payor system and create a pandemic. Why?
- Millennials who cannot pay for rising premiums feel they are better off rolling the dice and will go without insurance, consequently funneling money away from payors relying on those premiums.
- Baby boomers who can fund their own healthcare will conduct a risk-benefit analysis and determine they are also better off taking a chance and discontinuing their insurance. Like millennials, this decision will divert needed funds from payors.
- Accordingly, the middle-aged population (Generation X) will pick up the tab for millennials and baby boomers not paying into the system. But how long can that be sustainable? (see next item)
- Some estimates suggest that 156 million Americans have employer-sponsored insurance plans. As these premiums continue to increase, employers could change the way they sponsor these plans, possibly providing only a subsidy to workers to put toward healthcare. However, many experts believe these subsidies will not be spent on medical care but rather on non-health-related discretionary items, leading to more insurance opt-outs. Not surprisingly, this would leave payors with significantly fewer funds.
Preventing the free enterprise system from “doing its thing” will create a single-payor system managed by career bureaucrats. Not the best choice, in my opinion. I prefer the free enterprise approach that Medtronic Founder Earl Bakken and Zoll Medical Founder Paul Zoll used to create and seed some of the best therapies known to man.
Teachable Moment No. 4: As we have done for more than 200 years, we should allow the free enterprise system to “do its thing.” But, here’s a novel idea: If Washington wants to help, it should create incentives rather than punishments (i.e., medical device excise tax). Barring any last-minute legislative bailouts, there almost certainly may be a familiar line item on invoices across the nation reading, “Affordable Care Act Excise Tax.”
2017 Conclusion
Regardless of Obamacare’s fate, I hope my columns this year have given you the insight, tools, and techniques to help successfully navigate (configure) where you might be headed.
I’m going to conclude this year’s columns with a quote from another one of my favorite movies—“Remember the Titans.” Based on a true story, the movie highlights how opinions on opposite sides of polarizing issues (like healthcare) can come together for the good of the whole. We need Washington to watch this movie and study what the quote “left side…strong side” really means. It’s a football analogy that works towards the alignment of positions—similar to the hierarchical alignment I have spoken of often this year. So please, if anyone in Washington is reading this, remember “left side…strong side”
We need to rally for healthcare, whether it be for wellness or treatment of existing conditions. Washington needs to enable and incent the most economic powerhouse in the world to utilize its free enterprise system to compete and ultimately create a healthcare system that is sustainable and affordable. It needs to be incented, not controlled.
We’ve seen our nation rally before. We can and will again. Until then, I’ll just keep learning from my movies as I await Washington’s call for help. And if it ever comes, I’ll be there in a New York minute to help. How about you?
Chris Oleksy is founder and CEO of Oleksy Enterprises, Next Life Medical, and Emergent Respiratory. He can be reached at chris@oleksyenterprises.com or chris@nextlifemedical.com.
