Exploring service-line delivery

The latest McKinsey Quarterly has an article on the conversion from the traditional full-service hospital to one that focuses on service-line excellence (free registration required).  It’s a bit Porteresque.

It could be a great idea.  But there’s one big problem.

If you are unfamiliar, a service-line strategy means a hospital selects several service lines to focus upon (think nephrology, cardiology, neurology, etc).  It is sort of happening when hospitals tout “centers of excellence.”

It’s specialization.  A service-line strategy, in theory, means a hospital directs more resources toward what it does best.  The hospital then treats more patients in these service lines.  Quality should go up.  Prices should go down.

The problem with service-line specialization in the United States is our disproportionate system of paying for health care.  Cardiology and cancer make a lot of money.  Psychiatry and infectious diseases don’t.  There’s a big distinction between the two groups.  You can guess what kind of services hospitals would prefer to offer.