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Anesthesiology: Building a Competitive Strategy for the Future

August 9th, 2016

Anesthesiology: Building a Competitive Strategy for the Future
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Aman Mahajan, MD, PhD,
Chair of the Department of Anesthesiology
and Perioperative Medicine

"Even if you're on the right track, you'll get run over if you just sit there," said Aman Mahajan, MD, PhD, Chair of the Department of Anesthesiology and Perioperative Medicine, in his Grand Rounds presentation on August 3.

Dr. Mahajan was quoting Will Rogers, the famous American cowboy and humorist, in explaining to his audience why the specialty of anesthesiology needs to evolve and add value, or risk being marginalized over time. In 1846, he noted, the best and most successful surgeon was the fastest. But all that changed with the discovery of ether, which led to a major transformation in all of medicine.

UCLA has a great brand, Dr. Mahajan told the audience, but we are still competing with other institutions every day. And the delivery of anesthesia care, he said, is undergoing a gradual process of "commoditization". He defined a commodity as any product for which there is demand, but which is supplied without qualitative differentiation across a market. The intellectual capital necessary to acquire or produce the product becomes diffused over time, meaning that many people learn how to do it adequately, and the goods or services lose their uniqueness.

"That's natural, and should be encouraged," Dr. Mahajan said, "but it does lead to commoditization." This process wasn't seen as rapidly in health care because of regulatory barriers. But he cited the concept of "The Icarus Paradox" to explain how, as we have made anesthesia so much safer, "the things that made us very good may lead to our downfall as well."

"Everyone is improving their expertise and capabilities" in delivering sedation and anesthesia services, Dr. Mahajan said. Hospitalists, critical care physicians, emergency room physicians, and nurses on the wards today may give propofol for deep sedation. Other physicians — pulmonary critical care specialists and neurologists, for example — are becoming our rivals. For academic anesthesiology to distinguish itself, he said, it must deliver other value and become a "broad differentiator" in the marketplace.

"Without research, innovation, and teaching," Dr. Mahajan said, "you are no different from any other clinical provider. You have no competitive edge."

Porter's value chain

Michael Porter is an economist and long-time professor at the Harvard Business School who will give this year's keynote address at the upcoming ASA Annual Meeting in Chicago. He has written extensively on the field of competitive strategy, and defined a concept known as the "value chain". Dr. Mahajan referred to Porter's value chain analysis, which describes the activities an organization performs, and links them to its competitive position.

Dr. Mahajan noted that many great companies disappeared over time because they were unable to adapt and add new value as technology improved and markets changed. Blockbuster disappeared with the advent of online streaming, he explained, while Disney has succeeded by branching out and continuously growing the entertainment market. These disruptive changes have happened all the time in industry, and are happening now in health care.

"We are not just a specialty for intraoperative care or even perioperative care," Dr. Mahajan asserted. "We have to think of ourselves as adding value to the entire healthcare system." There is value in diversified services, he said, which is why the department is expanding its footprint in the community by working with the Department of Medicine to place anesthesiologists with expertise in pain management in outlying primary care clinics. Telemedicine may add to our presence as we develop the ability to do remote preoperative evaluations, and offer "tele-ICU" services.

"We can't compete on cost. This will be a losing strategy for us," Dr. Mahajan said. Instead, we need to use a visionary strategy as well as an adaptive strategy. "We need to reduce complications, and improve outcomes," he urged. "We need to make strategic investments in data warehouses, bioinformatics, and analytics. It makes sense for us to be involved in cross-disciplinary models."

As payment reform looms, spurred by the CMS creation of payment bundles for total joint replacement and cardiac care, anesthesiology programs "need to be prepared and ready to pivot," Dr. Mahajan said. The next frontier is likely to be population health and population medicine.

"How can we engage in population health?" he asked. One way is through involvement with the country's current problems in pain management and opioid addiction. "Drug overdose is the leading cause of accidental death," he said. "We should partner in solving this population health crisis." Our nascent network of pain centers, formed as a joint venture with medicine, radiology, and addiction medicine, is just one example of the type of business model innovation our department can do.

"Mission alignment and coordination are key," Dr. Mahajan said. Anesthesiology needs to innovate in three domains: satisfying the needs of consumers, developing new business plans, and extending new research into technology and risk models. "These are opportunities for us to create new knowledge," he concluded. "It all has to be centered around patient care, and around improving health and health care."

Karen Sibert, MD

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