Nashville’s $38.8B health care industry ponders future
Holly Fletcher | The Tennessean
How innovation is developed and implemented — not only by the legacy companies but also their ability to get patients and clinicians on board — will impact the future of Nashville’s industry.
Health care is an unwieldy industry where specialty takes years to hone and the infrastructure of the system hasn’t radically changed in decades. But with increasing costs and outcomes, there’s a rush at all levels to — buzzword alert — innovate.
The industry behemoths that call the Nashville area home are experimenting with different methods and locations of care. It’s often a multipronged strategy of changing the brick-and-mortar while searching for new technology to help streamline care and operations.
Physicians, hospitals and other segments of the sector must juggle health outcomes with changing consumer preferences and ever-evolving government regulations. For many companies, there also are the omnipresent investors who clamor for returns.
“You can’t aspire to what you can’t visualize.”
Companies are trying to figure out how to change the clinical care paradigm so that it’s more efficient, and ultimately costs less, Dr. Wright Pinson, CEO of the Vanderbilt Health System, said in an interview earlier this year.
Finding solutions in a do-more-with-less-money environment is imperative for the industry, which contributes $38.8 billion to the regional economy annually.
It’s a challenge that is reshaping legacy health care companies and giving entrepreneurs an opening to make an impact.
“There is less money available today than there has been,” Pinson said. “The growth of available monies either from the federal government, the state government or commercial payers — call it business if you want to — the increase of dollars going into the health care sector is just not going to exist.”
LifePoint Health, formerly LifePoint Hospitals, changed its name last year to better reflect its business model. More of its business is happening outside the walls of hospital campuses — the traditional location of care that’s seeing services diffuse to other facilities.
More than 50 percent of its revenue comes from outpatient facilities, said William F. Carpenter III, CEO of LifePoint. It and its peers are expanding the places where patients can get care.
“We saw a chance to let the name better reflect the future direction we see for the company,” Carpenter said. “Historically we have been a system of hospitals in smaller communities around the country. Today we are caring for those communities’ health and well-being in different ways.”
HCA is adding urgent care clinics and ambulatory surgery centers.
Community Health Systems is pruning its hospital portfolio by concentrating on markets where it can have a wider presence offering a variety of services. It’s completed a spinoff, and CEO Wayne Smith said on the most recent earnings call another divestiture could happen this year.
Vanderbilt University Medical Center, which is newly separate from the university, is opening clinics and expanding its reach across the state.
‘Breadcrumbing’ to ideas
In addition to the new signs and locations, there’s a push to better harness technology to streamline internal processes and better engage with patients.
How innovation is developed and implemented — not only by the legacy companies but also their ability to get patients and clinicians on board — will impact the future of Nashville’s industry.
“We’re not going to continue down the same path forever,” said Hayley Hovious, president of the Nashville Health Care Council. “They understand it, and they want to be a part of the solution.”
The companies, and even individual executives, invest in startups, venture capital and private equity funds and work with accelerators. HCA’s in-house venture capital arm, Health Insight Capital, looks for companies that solve a problem.
Amanda Havard, chief innovations officer at Health ELT, an engagement and logistics technology firm focused on Medicaid, said there’s a chance to disrupt a lot of processes, “probably a lot more than people are thinking about day in and day out,” but the ideas need to be accessible.
Working in Nashville is a chance to help industry veterans morph into their future selves, she said.
Nashville’s health care industry was rooted in startups when HCA was founded in a house in Midtown. The city remains welcoming to entrepreneurs who want to work and partner with some of the industry’s gold standard companies. Companies, and executives, invest in funds that scout out viable models that can rethink or modernize antiquated systems.
Cole Hawkins, founder and CEO of Dose, which sends clinicians to patients when and where they need the care, said he’s been approached by health system leaders who are interested in the model within the company’s first year.
Health care, with its complex regulations and expertise in specialized, lifesaving care, is not immune to the brand of disruption that brought Uber or AirBnB, but leaders of legacy companies have a more delicate relationship with change, officials say.
“I don’t see an opposition to creating new solutions or doing things differently,” said Vic Gatto, CEO of Jumpstart Foundry. “I do see a resistance to a one-size-fits-all approach.”
There’s a dichotomy, Gatto told The Tennessean in the first quarter, between what executives may say on a stage — where they often herald the value of what they do versus the conversations they have with entrepreneurs and investors, where they are intrigued by new ideas.
The weight of leading executives to change can fall on the shoulders of entrepreneurs, said Havard, who added startup leaders need to demonstrate a deep understanding of the “pain points” of the current system yet “honor what legacy companies are good at.”
Her company takes a “breadcrumbing” approach to introducing new technologies. It’s a process of developing a relationship with executives and demonstrating not only a studied understanding of an issue but also how a new technology fits in around the existing system to solve a problem.
“You can’t aspire to what you can’t visualize. You have to show people what could work in their space for people to visualize what it could be,” Havard said. “Nashville is a great spot (for entrepreneurs), but it’s still an uphill battle and a very long road.”
