Hospitals Are Shifting from A Factory Business Model to A Retail Business Model

I was talking with Medhost CEO, Bill Anderson, and he commented to me that hospitals thought they were running a factory, but they’re now running a retail business. When he said it, it really hit me that he’s right. We’re going through this massive change in healthcare that is analogous to us changing from a factory model to a retail business.

I’m sure the comparison isn’t perfect, but from a pricing structure it’s similar for sure. When you look at the fee for service world you can definitely see how healthcare was a factory. Its job was to take in as many patients as possible and spit them out the other end. That’s a bit of a harsh statement for many of the amazing and caring people in healthcare, but from a business perspective that’s pretty close to the reality. In fact, if it weren’t for the thousands and thousands of amazingly thoughtful and caring people in healthcare it would be much worse.

However, with the changes in reimbursement that have started to come and will continue to come, we’re asking healthcare organizations to convert from the factory business model to a more retail approach to medicine. One that focuses on the patient experience as opposed to putting as many patients through as possible. This is a huge shift in mindset.

From a technology perspective, this is going to be a very good thing. The only way to scale up the care provided a population is through technology. A doctor can’t be the end all be all to every patient. However, technology can help them focus on the patients that need them most. Technology can facilitate timely communication with large populations with the single click (or even no clicks).

This transition won’t be easy and it won’t be a simple plug and play technology in most cases. However, it’s going to drastically change the business of healthcare over the next 5-10 years. What are you doing to prepare for this change?

About the author

John Lynn

John Lynn

John Lynn is the Founder of the, a network of leading Healthcare IT resources. The flagship blog, Healthcare IT Today, contains over 13,000 articles with over half of the articles written by John. These EMR and Healthcare IT related articles have been viewed over 20 million times.

John manages Healthcare IT Central, the leading career Health IT job board. He also organizes the first of its kind conference and community focused on healthcare marketing, Healthcare and IT Marketing Conference, and a healthcare IT conference,, focused on practical healthcare IT innovation. John is an advisor to multiple healthcare IT companies. John is highly involved in social media, and in addition to his blogs can be found on Twitter: @techguy.