Value Rx for Healthcare: How to Make the Most of Your Organization's Assets and Relationships

Value Rx for Healthcare: How to Make the Most of Your Organization's Assets and Relationships

by Edward J Giniat, Barry D. Libert


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Product Details

ISBN-13: 9780066620954
Publisher: HarperCollins Publishers
Publication date: 09/01/2001
Pages: 256
Product dimensions: 6.12(w) x 9.25(h) x 0.95(d)

About the Author

Edward J. Giniat is a partner in Andersen's Chicago office, where he advises a number of pharmaceutical and healthcare-delivery organizations. Giniat is also worldwide director of Andersen's Pharmaceutical, Biomedical, and Health Services Industry Practice. He is a member of the board of directors of the National Committee for Quality Healthcare and the National Children's Eye Care Foundation and writes and lectures extensively on healthcare topics.

Barry D. Libert is an independent consultant, worldwide lecturer, and advisor to companies and institutional investors on enterprise value and relationships. Libert is a coauthor of Cracking the Value Code: How Successful Businesses Are Creating Wealth in the New Economy, the forerunner of this book. He has been featured in major publications including The Wall Street Journal, Newsweek, Barron's, The New York Times, and Industry Standard, and is a frequent guest on CNBC, CNN, Bloomberg TV, and Reuters TV. He is represented by the Leigh Bureau.

Read an Excerpt

Chapter One

The Secret of Success Today

"We've discovered the secret of life."
— Francis Crick, February 1953.

Gregor Mendel, an Austrian monk born in 1822, had a talent for math and a passion for horticulture.

By pursuing those interests further than others had dreamed, Mendel laid the foundations for genetics, which is to say, the fascinating and profoundly important science of how life continuously evolves.

As a monk at the Brno monastery in what is now Moravia, Mendel conducted a series of plant-breeding experiments, crossing multiple generations of peas to test for resultant characteristics, such as height, color, and shape. Eventually, he recorded the breeding characteristics of some 30,000 plants in the monastery gardens. From these, he formulated mathematical ratios describing the probability of transmission of hereditary characteristics from one generation of peas to the next.

For nearly 50 years, Mendel's published deductions were largely ignored, gathering dust on library shelves. But buried in his records was a hypothesis that would eventually describe and explain our molecular heritage. He suggested that certain hereditary factors — some recessive, others dominant — governed the characteristics of offspring and their abilities to survive and thrive. Those factors are what we now call genes, the basic DNA units that carry the hereditary information of every living organism. Yet, the scientific luminaries of the day, including Charles Darwin, overlooked, or evendenied, the significance of Mendel's work.

Mendel died in 1884, two decades before his research was recognized as a breakthrough. Eventually scientists began to focus on the gene's role and its role in passing characteristics from generation to generation. In the early 1950s, two former physicists, James Watson, an American, and Francis Crick, an Englishman, working with viruses and E. coli bacteria in petri dishes, discovered how genetic characteristics are passed from one generation to the next. The secret lay in the double-helix structure of a single molecule of deoxyribonucleic acid, otherwise known as DNA.

The double helix contains four chemical bases — adenine, cytosine, guanine, and thymine, which are represented by the letters A, C, G, and T. These chemicals endlessly combine and recombine, producing the astonishing multiplicity of life on earth. That stunning discovery, for which Watson and Crick received Nobel Prizes in 1962, stands as possibly the greatest scientific discovery of all time.

Still, it was not until June of 2000 that scientists succeeded in identifying the billions of chemical combinations that make up the human genome. This first rough map of the genome offers an internal landscape of almost unimaginable complexity. Matt Ridley, former science editor of The Economist, offers this vivid perspective:

If I read the genome out to you at a rate of one word per second for eight hours a day, it would take me a century. If I wrote out the human genome, one letter per millimeter, my text would be as long as the River Danube. This is a gigantic document, an immense book, a recipe of extravagant length, and it all fits inside the microscopic nucleus of a tiny cell that fits easily upon the head of a pin.

Ridley believes that "being able to read the human genome will tell us more about our origins, our evolution, our nature, and our minds than all the efforts of science to date. It will revolutionize anthropology, psychology, medicine, paleontology, and virtually every other science."

And he isn't alone in his assessment. Writes Fortune: "Sequencing the genome is often called 'biology's moon shot.' That's wrong: Getting to the moon was a joy ride to a dead end — it had no lasting effect on our everyday lives. Decoding the genome will trigger developments that will change our daily lives as much as westward expansion changed the U.S."

Can business learn anything from the quest to understand the human genome?


Consider the concept that, by analogy, every business, like every organism, has a set of gene-like factors — its assets and relationships — that managers can combine and recombine, thus directing a business' growth, profitability, and market value.

Imagine if we could identify and map the factors that both create and destroy value in the healthcare industry — indeed, in every industry. Imagine if we could identify a finite number of fundamental assets and relationships — say, four or five — that in combination form the basis of every business, indeed, of all economic life. Imagine if we could identify those combinations and map the individual and unique business genomes of companies and economies everywhere, helping enterprises make the right investment decisions, and, in the process, mitigate risk and maximize returns.

Many of these combinations of fundamental factors need not be left to the imagination. They already exist. Managers have used them to launch a global revolution in value creation. They have allowed companies of all sizes and types to create unprecedented wealth for all their stakeholders: some $3 trillion of new wealth in just the last 10 years (despite the recent gyrations in the stock markets).

This book asks what are today's most powerful sources of value. It is, as our title suggests, our Rx for creating value in the healthcare industry and in your healthcare organization.

Our investigation of value — how it is created and destroyed — began with the book, Cracking the Value Code — How Successful Businesses Are Creating Wealth in the New Economy. In it, we offered a comparison between the natural and business worlds. Just as all life is a function of four chemical bases combining and recombining, we suggested that all organizations can be viewed as functions of their assets and relationships, interacting in infinite combinations.

Then: Tangible assets.
Now: Assets and Relationships.

The previous book asserted that the essence of any business is not its products, markets, or processes, vital as all these may be. Instead, the core of a company, your company — its economic DNA — consists of five sources of value: physical assets, financial assets, organization assets (patents, brands, and the like), and relationships with customers, employees and suppliers.

Our first book...

Table of Contents

Part 1What Matters Now? Assets And Relationships
1The Secret Of Success Today7
2Do You Measure What You Value?23
3It Is Time To Manage What You Value39
Part 2Who's Managing The Assets And Relationships That Matter Now?
4Who's Creating Value With Physical Assets?55
5Who's Creating Value With Financial Assets?71
6Who's Creating Value With Employees And Suppliers?83
7Who's Creating Value With Customers?99
8Who's Creating Value With Organization Assets?117
Part 3How Can You Manage The Assets And Relationships That Matter Now?
9See And Build You Business Model145
10Take And Manage Risk Like An Astute Investor163
11Connect The Sources Of Value You Own With Those You Don't183
12Measure And Manage All Your Sources Of Value201
13It's Time To Manage What Matters In Healthcare215

What People are Saying About This

James Anderson

In today's highly complex healthcare environment, ValueRX is a true how-to book about creating value with all your organization's most important assets and relationships. Libert and Giniat have cracked the genetic code of economic results for our times. This is a book all executives need to read.
—James Anderson, CEO, Children's Hospital Medical Center

William M. Dwyer

ValueRX provides a valuable glimpse into the future of what will constitute the sustainable model for [healthcare industry] of tomorrow. As we better understand the role our people play (e.g. nursing staffs) in creating customer value, the more able we will be to direct resources and assets that produce low-error, high quality health care services. And, that matters! This book is a must read for Governance Boards that hope to lead and guide the great health institutions of today, towards sustainable business models for decades forward.
—William M. Dwyer, Divisional Vice President, Strategic Marketing, Abbott Laboratories

Daniel M. Cain

Among a generation of 'how to' books aimed at changing medical delivery, Value RX scores a bulls-eye. It's the new bible for successful executives.
—Daniel M. Cain, President and CEO, Cain Brothers

John Glaser

Giniat and Libert provide a superb analysis of the true assets of the healthcare organization. In developing the Value Dynamics Framework, they note that the organization's most valuable assets are not reflected in the balance sheet. The authors provide insightful guidance for managing, developing and evaluating these assets enabling the delivery of deep and sustained value to stakeholders.
—John Glaser, Vice President and CIO, Partners Healthcare Systems

Edward Eckenhoff

The prescriptions in Value RX work. Over the last 18 months, we have decertified our labor union, we have kept our beds continuously full, and we are doing better than ever. Everyone now knows that people re our most important asset.
—Edward Eckenhoff, President and CEO, The National Rehabilitation Hospital

Diane Appleyard

Value RX: Beginning with the conquest of gene mapping and ending with Socrates, Giniat and Libert make a strong case for a fresh look at how we value all aspects of the healthcare system and delivery system. Looking at parallel tracks between scientific advances and the business of healthcare, the book is filled with fascinating real-life examples of managing and measuring what matters. In the blending of realistic and idealistic-margin and mission-they redefine economic value.
—Diane Appleyard, President and CEO, Healthcare Research and Development Institute, LLC.

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