In healthcare, as in other industries, not all organizations possess the same value generating capabilities. Thus, once the strategic decision is made to adopt a value-based approach, the successful utilization and deployment of existing or acquired value-laden resources does not just happen. Those resources are merely potential. They are inert or dormant awaiting activation by organizational capabilities. A fundamental premise of this perspective is that successful value-based healthcare deployment is therefore not a given, but requires leaders to strategically ready the organization to increase the likelihood of success. “Just Do It” is a recipe for failure. Preparation through the cultivation of institutional capabilities will greatly enhance the likelihood of implementation success and realization of value.
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Barney and Arikan (2001) define resources and capabilities as follows: resources are "the tangible and intangible assets firms use to conceive of and implement their strategies" (pg.138) while capabilities are "those attributes of a firm that enable it to exploit its resources in implementing strategies" (pg.139). Organizational capabilities are tacit social structures that over time are established in an organization to address specific problems and challenges existing within the firm’s business and operating environments (Flynn, Wu & Melnyk, 2010). As such, a capability is distinctly different from a resource; a capability represents management's deliberate and purposeful building of a means to productively allocate, coordinate and deploy resources towards a beneficial end.
Therefore, in order for value-based healthcare to succeed, significant managerial capabilities should be developed within the healthcare organization before embarking on a value-based healthcare approach. These capabilities will not only enable value delivery, but they can form a comparable resource advantage over the long run.
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At IICHI, we envision a VBHC adoption as a four phased sequence as depicted in Figure 1. Key to the triggering of the process is cultivation. As such, we have developed an educational program designed to cultivate the requisite capabilities and skills to designing a value delivery system. Strategically readying the organization through an investment in the development of these capabilities is the keystone to successful adoption.
Figure 1: Strategic VBHC Adoption
Cultivation of Capabilities Is the Foundation of a Four Stage Value-Based Healthcare Movement