Institutional Opportunity
How two of society’s most prestigious institutions should address their uncertain futures
“Never let a serious crisis go to waste.” — Rahm Emanuel (ex-Chief of Staff to President Obama)
As the COVID-19 pandemic has wrought havoc to business models everywhere, even two of the world’s most prestigious institutions — universities and hospitals — are having to rethink how they do business.
Three months ago, no one would have thought the future of hospitals and universities were in jeopardy. In fact, they probably looked as strong as ever. But the pandemic has completely altered that reality.
Universities, by shifting all of their classes to online-only, are struggling to convince their students — or their parents — that a virtual education costs the same amount as the in-person one.
Despite it being a health crisis, hospitals are not benefiting financially either. In fact, they are losing billions of dollars in revenue from patients deciding to put-off non-essential treatments, surgeries, and care.
The impact of the pandemic has caused these two institutions to begin to have conversations about their future survival. And the question they are asking themselves is what should we do?
I believe they should fundamentally rethink their models. Doing so would not only address the concerns of today but also better prepare these institutions to thrive in the future.
Rethinking Universities
For universities, they need to embrace online education. Not just in the way that they are today by having classes over Zoom but by adopting it as part of their business model.
This means fully embracing a hybrid student body of both online and in-person students. Some universities have begun to do this. A good example is Georgia Tech’s online Master’s program. You can get a degree from a reputable university, entirely online.
But while this is a great example of what can be done, it’s revealing in its rarity. Even Georgia Tech itself doesn’t offer an online-only Bachelor’s Degree program. Why not?
My best guess is that universities think online degrees are of lower calibre than their in-person counterpart.
Are there differences between learning things online and learning things in-person? Yes, absolutely. But that doesn’t make one an education and the other not. There’s nowhere in a university’s mission statement that says anything about only educating society in-person, is there?
Now that classes are being forced to take place online, it’s the perfect time to take a fresh look at how to incorporate an online-only education into the university model.
Of course this doesn’t address the concern that was raised at the beginning of this essay. Arguably universities are embracing online education, even if being forced. The challenge in this new reality is convincing society that their online education costs just as much as the in-person education. But why does it need to?
It makes a lot of sense to charge different rates for these different types of students. After all, I don’t think anyone is arguing there’s no difference between being shipped off to a beautiful campus, with olympic sized pools, and a plethora of night-life activities to attend to taking classes out of your basement with no other coeds in sight.
The problem isn’t that you might have to charge student’s different rates, it’s that the university business model has been built off of exclusivity. Instead of following their own mission statements and educating society, they have been built up over time to make it so exclusive that they can get away with charging $70k per year for each student.
So the suggestion to embrace a hybrid student body not only means having classes that are hosted online, but it also means opening up enrollment to many more students.
Online classes aren’t constrained by physical space the same way their in-person counterparts are. So why not increase the size of the student body by accepting many more students to participate in online-only educations?
Not only would universities get closer to their missions of actually aiming to educate all of society, not just the select few, it would also help their business models adapt. You may end up charging online-only students less but you’ll make up for the difference in volume.
And for those that balk at the thought of accepting more students into prestigious universities because it may bring down the overall quality of a graduate that comes out with a degree, this shouldn’t be an issue if the education of said universities is truly high quality.
Will professors need to adapt and learn how to teach online? Of course, but I would guess they are already doing this. Human beings are amazingly adaptive creatures, don’t underestimate what your own professors can do.
Rethinking Hospitals
Hospitals need to shift their model from almost pure reactionary healthcare — treatment after you get sick — to one that better embraces preventative healthcare — avoiding getting sick in the first place. They can make this shift by merging health insurance with healthcare, making preventative healthcare a primary part of hospitals’ offering, and using remote medicine to its full advantage.
The healthcare system in the United States has a terrible incentive structure right now. The organizations providing care are incentivized to charge ridiculously high prices because of the way they are paid, often not by the patient themselves but through negotiations with insurance companies. This leads to little transparency in costs. When was the last time you got a health bill before you received care?
This model isn’t sustainable. To fix it, we should merge health insurance with health care at our hospitals. It can be thought of as the Costco/Amazon Prime model. Members pay a monthly or yearly fee for access to services and products at reduced prices.
Merging the two, better aligns incentives by encouraging long-term health — putting off the right care will only make the problem worse off and more costly in the long-run — without the need of unnecessarily high costs. If our healthcare providers really care about our long-term health and well-being, shouldn’t they be incentivized to reduce costs and treat patients in a way that ideally prevents them from needing more care in the future?
And speaking of preventative care, it’s time to make preventative healthcare a primary part of our hospitals’ offering. If you were to look at any hospital, what are the most respected positions or services? Surgeons. No doubt that surgeons play an important role in treating people’s health, but if you have to go to a surgeon for help, it’s too late. Our hospitals should be aiming to treat patients so that they never have to go to a surgeon.
Which raises a problem with primary care. Why is it that the recommendation is to only visit your primary care physician once a year, if you are healthy? What if primary care was actually treated like its name, primary?
One of the great promises of a primary care doctor is building a relationship with them. So that they get to know you and understand your unique needs. But this is a joke when you visit them once a year and are one of hundreds of patients. What kind of intimate relationship gets built in that kind of way?
This leads to the last change that hospitals need to make, which is to use remote medicine to its full advantage. If it’s unfeasible for our primary care doctors to see us more than a few times a year, it’s mostly because of the inefficiency of the current model of in-person office visits.
Most primary and preventative care can be conducted virtually. There are so many smart health devices out there today that there’s no reason your primary care physician shouldn’t have an intimate knowledge of what’s going on in your body in real-time. In this model, a primary care physician may become more data scientist than doctor.
Hospitals should be at the forefront of remote medicine, not the rear. Why is it that most people first go to Google for their healthcare questions? Because there is no alternative out there from your own healthcare provider. This is the opportunity.
There are many adjustments that universities and hospitals will need to make in order to survive the pandemic. It is my hope, however, that they not just look to survive the pandemic but instead use it as an opportunity to really rethink their approaches.
Let’s hope they don’t let this crisis go to waste.
