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TitleService Business Model Innovation in Healthcare and Hospital Management: Models, Strategies, Tools
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Table of Contents
Service Model Innovation in Hospitals: Beyond Expert Organizations
	1 The Next Competitive Battle in Healthcare: The Innovation Imperative
	2 Ten Tenets: Overcoming the RRP-Paradigm
	3 Overcoming the Pitfalls of Expert Organizations
		3.1 Determinants of Expert Organizations
		3.2 Being Braced for the Digital Era: Establishing the 6-S-Concept in Hospitals
	4 Smart Service Organizations in Healthcare
		4.1 Applying SMART to Hospitals
		4.2 Roadmap for Smart Service Organizations
	5 Conclusion
Strategies with Service Business Model Innovation
	1 Business Model Design
	2 Business Model Innovation
		2.1 Additional Avenues for Innovation
	3 Service Business Model Innovation
	4 Creating Value
		4.1 Decision Making in the Value Chain
	5 Barriers to Innovation
	6 Strategies for Innovation
	7 Integration of Business Model with Strategy to Protect Competitive Advantage
	8 Conclusion
The Integrated-Physician-Model: Business Model Innovation in Hospital Management
	1 Introduction
	2 Hospital Business Models and Business Model Innovation
		2.1 Hospital Business Models on Industry-Level (Macro Perspective)
		2.2 Hospital Business Models on Firm-Level (Micro Perspective)
			2.2.1 Traditional Business Models
				The Chief-Physician-Model
				The Attending-Physician-Model
			2.2.2 Critiques of the Traditional Business Models
				Rigid Thinking in Medical-Disciplines in Both Models
				Rigid Silo-Thinking in the Chief-Physician-Model
				Rigid Single-Doctor-Thinking in the Attending-Physician-Model
			2.2.3 Potential for Hospital Business Model Innovation
	3 The Integrated-Physician-Model: Business Model Innovation in Swiss Health Care
		3.1 Target Customers
		3.2 Value Chain
			3.2.1 Processes and Activities
			3.2.2 Resources
			3.2.3 Capabilities
			3.2.4 Orchestration
				Main Principles of the Integrated-Physician-Model
				The Main Building Blocks of the Integrated-Physician-Model
		3.3 Revenue Model
		3.4 Value Proposition
			3.4.1 Value for Patients
				Medical Quality
				Patient Satisfaction and Patient Experience
				Price and Costs
			3.4.2 Value for Doctors
			3.4.3 Value for the Funding Agencies
	4 Conclusion
The Role of Digital Disruption in Healthcare Service Innovation
	1 Introduction
	2 Definitions
	3 Information Technology (IT)
		3.1 Apps
		3.2 High Speed Broadband
		3.3 Wi-Fi
		3.4 Electronic Medical Records (eMRs)
		3.5 Big Data and Data Analytics
		3.6 Cognitive Computing and Artificial Intelligence
	4 Perspectives
		4.1 Stakeholders
		4.2 Activities
		4.3 Resources
		4.4 Economic Models of Healthcare
	5 Conclusion
The Opportunities Offered by Digitizing Clinical Pathways
	1 Digitization Changes the Way Hospitals Operate
		1.1 For the Sake of the Patient: The Opportunities Produced by Digitizing Clinical Pathways
		1.2 Challenges and Success Factors for the Implementation of Digitization
		1.3 Think Big: Types of Solutions to be Considered
	2 Case Study: Digitization of the TAVI Procedure
	3 Sizing the Opportunities of Digitizing Clinical Pathways: A Heart Failure Scenario
	4 Revenues, Costs and Profit: The Impact Assessment of Digitization
	5 Conclusion: A Perspective for Digitization in Hospitals-The Way Forward
A New Perspective of Product-Service Business Models for Customized Manufacturing in Healthcare
	1 Introduction
	2 State-of-the-Art
		2.1 Customized Manufacturing of Healthcare Devices
		2.2 Product-Service Systems from a Business Model Perspective
			2.2.1 PSS Business Models
			2.2.2 PSS and Business Models for Healthcare
			2.2.3 Gap Identification
	3 Moving Towards a Product-Service Business Model for Personalized Manufacturing in Healthcare
		3.1 Preliminary Stakeholder Analysis
		3.2 Development of Business Model Structure
		3.3 Configurations of PSS Business Model for Personalized Fabrication of Medical Devices
			3.3.1 Product-Oriented Business Model: Manufacturing Hospital Buys Physical Product and Additional Services
			3.3.2 Use-Oriented Business Model: Manufacturing Hospital Pays per Use of Machinery
			3.3.3 Result-Oriented Business Model: Manufacturing Hospital Pays per the Final Performance
		3.4 Benefits and Challenges of the Proposed Configurations
	4 Conclusion
Patient Driven Service Delivery Models in Mental Health Care
	1 Framing the Issue-Understanding the Mental Healthcare Delivery Arena
	2 Importance of Service Delivery Model in Assuring Access to Care
	3 Understanding the Utility of Treatment Non-adherent Visits and Recidivism to Inpatient Care as Markers of Improved Patient-C...
	4 Capturing Useful Data for Patient-Centric Service Delivery Model Development
	5 A Case in Point
		5.1 Exploring Data
		5.2 Application of Concept Mapping
		5.3 Exploration Utilizing Graph Database and Graph Analysis
		5.4 Direct Patient Input into Generating and Evaluating Patient Centric Interventions
	6 Lessons Learned Around Developing Patient-Centric Service Delivery Models
	7 Conclusions
Essential Characteristics of Service Business Model Innovation in Healthcare: A Case-Study Approach
	1 The Evolving U.S. Healthcare System
	2 Accountable Care
	3 Integrated Delivery
	4 Shared Savings and Value-Based Approaches
	5 Trust, Leadership and Cooperation: The Pillars of Innovation
	6 Case Study 1: Sutter Health and the Sutter Medical Network, An Interview with Sarah Krevans and Dr. Don Wreden
		6.1 About Sutter Health
		6.2 Changing Healthcare Environment Requires Innovation
		6.3 Processes
			6.3.1 Find a Way to Collaborate
			6.3.2 Embrace Strong Leadership
		6.4 The Future of Service Model Innovation in Healthcare
	7 Case Study 2: BJC HealthCare and the BJC Collaborative, An Interview with Sandra Van Trease
		7.1 About BJC
		7.2 Changing Healthcare Environment Requires Innovation
		7.3 Processes
			7.3.1 Set Priorities That Matter to Staff and Leadership
			7.3.2 Get Results
			7.3.3 Communicate What Works
		7.4 The Future of Service Model Innovation in Healthcare
	8 Case Study 3: Massachusetts General Physician Organization, An Interview with Dr. Daniel Horn
		8.1 About MGPO
		8.2 Changing Healthcare Environment Requires Innovation
		8.3 Processes
			8.3.1 Create Quality Measures That Are Clinically Valid and Meaningful
			8.3.2 Change the Mentality
			8.3.3 Usable Data
		8.4 The Future of Service Model Innovation in Healthcare
	9 Case Study 4: Baylor Scott and White Health, An Interview with Michael Mack, M.D.
		9.1 About Baylor Scott and White Health
		9.2 About Cleveland Clinic
		9.3 Changing Healthcare Environment Requires Innovation
		9.4 Processes
			9.4.1 Trust Is Built over Time
			9.4.2 Leadership Takes Vision
		9.5 The Future of Service Model Innovation in Healthcare
	10 Conclusion
Characteristics of Service Innovation in Hospitals: A Case Study of Three Mexican Hospitals
	1 Introduction
	2 Literature Review
		2.1 Service Innovation
		2.2 Types and Degrees in Services Innovation
		2.3 Stages of the Innovation-Decision Process
		2.4 Service Innovation in Hospitals
	3 Methodology
		3.1 Hospital Services Innovativeness
	4 Results
		4.1 General Description of the Hospitals Studied
		4.2 Service Scope (Market)
		4.3 Dimensions
		4.4 Innovativeness Index
	5 Discussion
		5.1 Innovation Types and Degree of Novelty
		5.2 Sources of Innovations
		5.3 Innovation Users
		5.4 Components Contributing to Innovation
		5.5 Means of Delivering Innovative Services
		5.6 Innovativeness Index and Process Innovation Stages
		5.7 Research and Development and Linkages
		5.8 Certification, Personnel and Training
	6 Conclusions
Business Model Design and Entrepreneurial Risk Evaluation for Health Service Innovations
	1 Introduction
	2 Theoretical Background
		2.1 Business Models in Health Care
		2.2 Integrated Health Care
	3 Business Model Extensions of Hospital Services
		3.1 Preventive Care and Backwards Integration
		3.2 Evaluation of Business Model Extensions
	4 Health Service Business Model Evaluation: A Simplified Example
	5 Conclusion
Guided Business Modeling and Analysis for Business Professionals
	1 Introduction
		1.1 Business Model Canvas
		1.2 State of the Art
	2 Domain-Specific Modeling
	3 Case Study in Personalized Medicine
		3.1 Domain-Specific Setting
		3.2 Canvas-Based Modeling
		3.3 Wizard-Based Guidance
		3.4 Integrated Model Analysis
		3.5 Lessons Learned
	4 Canvas Customization
		4.1 Tile Arrangement
		4.2 Containment Rules
		4.3 Canvas Templates
		4.4 Analysis Tables
	5 Conclusion
Modeling Directly Executable Processes for Healthcare Professionals with XMDD
	1 Introduction
	2 Domain-Specific Process Modeling
		2.1 XMDD
		2.2 One-Thing Process Design in the jABC
		2.3 Library of Building Blocks
		2.4 Model Reuse and Hierarchical Models
		2.5 Process Execution
	3 Case Studies in Diabetes Care
		3.1 Polyclinical Workflows of a Diabetes Day-Care Clinic
		3.2 Retinopathy Screening Workflows Along a Diabetes Care Clinic
	4 Case Study in Cancer-Related Cachexia Research
		4.1 Patient Classification Workflows for Cachexia
		4.2 Laboratory-Related Workflows in Cancer/Cachexia Research
	5 Conclusions
Lean Tools for Service Business Model Innovation in Healthcare
	1 Lean Tools for Service Business Model Innovation in Healthcare
	2 Lean´s Early Development
	3 Origin and Implications of Lean as a Term
	4 Ohno´s Categories of Waste: TIM WOOD (and U)
		4.1 Transportation
		4.2 Inventory
		4.3 Motion
		4.4 Waiting
		4.5 Overprocessing
		4.6 Overproduction
		4.7 Defects
		4.8 Untapped Creativity
	5 The Lean Process
	6 Some Health Care Lean Success Stories
	7 Lessons Learned
		Exhibit 2
	8 Conclusion: Lean as Differential Diagnosis
Continuous and Co-creative Business Model Creation
	1 Introduction
	2 Business Model Elements in the Service Domain
		2.1 Literature Review: Service Dominant Logic
		2.2 Literature Review: The Business Model
		2.3 Business Model Elements in SDL
	3 A Framework for Service-Dominant Business Model Dynamics
		3.1 Literature Review: Business Model Dynamics
		3.2 Literature Review: Innovation and Transformation
		3.3 The Change Model
	4 A Framework for the Service-Dominant Business Model´s Development
	5 Business Model Innovation in the Health Care Business Case
		5.1 The Case Company
		5.2 The Business´s Development
		5.3 Heltti´s Business Model Development Framework
	6 Discussion and Evaluation of Heltti´s Case
	7 Conclusion
e-Health and Co-production: Critical Drivers for Chronic Diseases Management
	1 Introduction
	2 The Relevance of Heart Failure as a Chronic Disease
	3 Telemedicine and Co-production in Heart Failure
		3.1 Remote Monitoring Technologies: A Specific Tool for Co-production
		3.2 Remote Monitoring Technologies for Implanted and Non-implanted Patients
		3.3 Heart Failure Remote Management Studies for Non-implanted Patients
	4 Telemedicine and Co-production for Non-implanted Patients: An Empirical Pilot Case Study
		4.1 The Overview of the Pilot Case Study Design
		4.2 The ``AS IS´´ Pathway for Heart Failure Patients
		4.3 Heart Failure Patients: A New Healthcare Service
		4.4 The Implementation of the Service Innovation: The ``TO BE´´ Model Process
		4.5 The Operative Flow Chart of the ``Policlinico Casilino´´ eHealth Center
		4.6 The Duties of the ``Co-producer´´ Patients
		4.7 Specific Duties of the Technicians and Doctors
			4.7.1 Technician
			4.7.2 Doctor
	5 Conclusion
Document Text Contents
Page 1

Mario A. Pfannstiel · Christoph Rasche

Service Business
Model Innovation
in Healthcare
and Hospital
Models, Strategies, Tools

Page 2

Service Business Model Innovation in
Healthcare and Hospital Management

Page 152

5 Trust, Leadership and Cooperation: The Pillars
of Innovation

“The move toward accountable care and the resulting clinical and financial integra-

tion of providers represents a major challenge to conventional thinking.” (Pavarini

et al. 2015) In the fee-for-service system, which still accounts for the majority of

reimbursement, financial incentives are tied to the volume of services a provider

delivers. Financial success then, depends on generating volumes high enough to

cover fixed costs, which can be quite high in the case of a hospital or specialty

healthcare organization such as a cancer center of excellence.

Now, and increasingly in the future, a healthcare organization must be concerned

about the quality of care a patient receives from other providers in accountable care

organizations or other parts of the integrated network. Innovation that leads to

improved performance requires focusing on the role of cooperation and trust in

changing both processes and resources required to deliver value to customers.

Organizations that were formerly competitors may be turned into partners through

service business model innovation. Healthcare organizations that have succeeded in

innovating in the new world of accountable care, integrated delivery, shared-

savings and value-based approaches have certain characteristics in common. Busi-

ness model innovation requires three key skills: trust, leadership and cooperation.

The following case studies highlight various ways organizations are, in Pavarini’s

words, “challenging conventional thinking” by using these key skills (see Table 1)

to create service business model innovation in the U.S. healthcare system.

6 Case Study 1: Sutter Health and the Sutter Medical
Network, An Interview with Sarah Krevans
and Dr. Don Wreden

Sarah Krevans was named President and CEO of Sutter Health in January 2016

after serving in several roles at the organization starting in 1999 as senior vice

president of managed care, the regional executive officer and president of the Sutter

Health Sacramento Sierra region of 11 years, then the Chief Operating Officer for

4 years. Krevans took the reins from Pat Fry, who had served the not-for-profit

Sutter Health network for more than 30 years, culminating in his 10 year role as

Table 1 Lessons in building trust, cooperation and leadership

Trust Cooperation Leadership

1. Trust takes time 1. Cooperate with other provider


1. Develop leaders

2. Build personal


2. Cooperate across types of

healthcare providers

2. Get buy-in at highest level

3. Value every part of

the team

3. Cooperate with other healthcare


3. Be willing to lead in the


Source: Authors’ analysis (2016)

142 B. Gleason and J. Bohn

Page 153

President and CEO. Fry is credited with creating the Sutter Medical Network.

Notably, Fry explained the transition from his leadership to Krevan’s as part of

the Sutter process. This case study highlights the importance of trust and leadership

in healthcare service model innovation.

Don Wreden, M.D., has been Senior Vice President for Patient Experience at

Sutter Health since January 2015. Dr. Wreden was president and Chief Executive

Officer of Sutter Medical Group for more than a decade before being named clinical

partner to Krevans. This clinical and administrative partnership, a “dyad” in Sutter

lingo, is central to the organizational structure.

6.1 About Sutter Health

Sutter Health is a community-owned, not-for-profit healthcare system operating in

northern California. The system has over 50,000 employees and 5000 affiliated

physicians. Facilities include 24 hospitals, 34 outpatient surgery centers, 9 cancer

centers, 9 neonatal intensive care units, 6 behavioral health centers, 5 acute reha-

bilitation centers, 5 trauma centers, and more than 4000 licensed acute care beds.

Sutter had more than 11 million outpatient visits in 2014. It also runs its own health

plan, Sutter Health Plus, and provides education and training to healthcare

clinicians through several residency programs.

6.2 Changing Healthcare Environment Requires Innovation

In the new U.S. healthcare environment, a firm’s essential focus on the customer

must expand from thinking solely of the patient to considering other healthcare

providers as customers. Innovation that leads to improved performance requires

focusing on the role of cooperation and trust in changing both processes and

resources required to deliver value to customers. For example, organizations that

were formerly competitors may transition into collaborative partners through ser-

vice business model innovation to achieve their common goals of improving the

quality and satisfaction of care while reducing the cost of care.

Sutter Health started in just one region of California. The vision was to build a

patient-driven healthcare system where patients had access to a network of

physicians and services. It was built as an integrated healthcare system from the

beginning, explained Krevans, not as a hospital at the center with other kinds of

healthcare services as satellites to the hospital.

The process of integrating was respectful and slow. Notably, as the medical

groups and independent practice associations grew, they remained their own legal

entities. By California law, physicians may not practice medicine as employees of

the healthcare system (California Business & Professions Code §§2052 and 2400).
As a result, there was a concerted effort to find ways to collaborate in order to best

serve patients.

Essential Characteristics of Service Business Model Innovation in Healthcare. . . 143

Page 303

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Gabriele Palozzi is a Research Fellow in Management at the University of Rome “Tor
Vergata”—Italy, Department of Management and Law. His studies addressed the theme of

Managerial Control and Performance Management as part of Health Technology Assessment.

Particularly, they regard the economic impact of telemedicine in cardiac diseases management, as

support and replacement of standard in-hospital cares. Currently, he is developing a research that

involves more then 1000 patients, remotely monitored by the Hospital Policlinico Casilino of

Rome, that actively participate to their own follow-ups.

Daniele Binci is a Research Fellow in Management at the University of Rome “Tor Vergata”—
Italy, Department of Management and Law. He received his PhD in Management from the

University of Rome “Tor Vergata”. His main research interests include organizational change,

with a focus on leadership, climate and business process management.

Andrea Appolloni is a Research Fellow in Management at the University of Rome “Tor
Vergata”—Italy, Department of Management and Law. He is currently visiting fellow at Shanghai

Jiao Tong University, China. His research interests mainly lie in the fields of purchasing, supply

chain management and sustainability.

296 G. Palozzi et al.

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