The concept of the Second Curve is relatively new to hospitals. It was first popularized in Ian Morrison’s 1996 bestseller The Second Curve: Radical Strategies for Managing Change. His thesis is simple: after a successful run, organizations hit a plateau during which uncertainty about the future is heightened. Some are paralyzed; others chart a new course — their second curve.

Last year, the American Hospital Association published Your Hospital’s Path to the Second Curve: Integration and Transformation, predicting “the health care field will ultimately shift from the first curve, where hospitals operate in a volume-based environment, to the second curve where they will be building value-based care systems and business models.”

It makes sense: Hospital operating margins are shrinking, Medicare, Medicaid and commercial insurers are paying less, demand is increasing and patients are sicker. Paralysis is understandable: The end of the First Curve is in sight.

Second Curve hospitals see the future differently. Their clinical model is holistic and individualized. Technology is digital and shared, and the preferences and values of individuals are just as important as their signs and symptoms. They focus on persons, not patients.

The distinctions between First-Curve hospitals and Second-Curve hospitals are significant:

 

First-Curve Hospitals

Second-Curve Hospitals

Focus

Health care for the sick and injured

Health products, programs and services for all states of health

Centerpiece

Patients dependent on caregivers (visits, tests, procedures, utilization)

Persons with individual needs and values + their social network + their caregivers

Primary decision-maker

Physician-centric

Guided self-care management with individuals as shared decision-makers

Skilled workforce focus

Licensing of professionals; efficiency and productivity; individual performance

Competency based on lifelong learning + information technologies and operating models that support team-based outcomes

Clinical strategy

Traditional: Diagnosis and treatment based on signs, symptoms, risk factors, comorbidities

Traditional + alternative health + individual preferences & values

Primary care role

MD/DO-driven (episodic, semi-regular)

Medical home: physician + dentist + nutrition + mental health + health coach + pharmacist managing populations and individuals

Technology strategy

Provider-focused (EHR): clinical (Goal: patient care management by individual practitioners)

Shared (EHR + PHR): connected, mobile, financial + clinical (Goal: shared decision-making about treatments, costs with care team)

Facility strategy

Bricks & sticks focus: Efficiency of use by assembly-line operators

Clicks & tools focus: efficiency of use & access by persons is the key focus

Capital investment focus

Clinics, acute & post-acute facilities + technologies for diagnosis and treatment

Care coordination for individuals: in-home + mobile + clinics + workplaces/schools +, acute, post-acute + (integrated, connected)

Data

Financial, clinical in separate, parallel separate channels accessible to caregivers and payers

Financial + clinical data fully integrated and owned by individuals, shared with care team and social network

Incentives

Volume

Value (more than lower costs)

Sustainability

Margin & scale

Margin, scale & social responsibility

Each of these distinctions is challenging. Together, they’re transformational. They’re about systems of care, not a collection of services that share space and risk. They’re about technology-enabled, guided self-care management for individuals in social networks connected to their care teams. They’re about systems of care that focus on persons, not facilities that focus on patients.

Most hospitals are operating in a First-Curve model. Some will transition to the Second Curve; others will be paralyzed by the ominous threats facing the industry and fail.

Paul H. Keckley, Ph.D., a health economist and expert on U.S. health reform, is managing director at the Navigant Center for Healthcare Research and Policy Analysis. His H&HN Daily column appears the first Monday of every month. He is a member of Health Forum's Speakers Express. For speaking opportunities, contact David Parlin.