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January 15, 2019

My 2019 Cocktail Napkin Picture

I am writing today’s post from seat 6F on the Southwest Airlines flight from Denver to Sacramento.  The snow-covered Rockies are off to my right and I suddenly feel like Hemingway, waxing just a bit too poetic. 

Recently, Herb Kelleher, the hard-charging Texan who founded Southwest, passed away.  I should have a whiskey in Herb’s honor, but it is 9:00 in the morning and I have a business meeting when I land.  Maybe tonight.

Stories about Kelleher are legendary, but none more so than the famous cocktail napkin, a simple triangle sketched out in a bar (of course) by Herb and his partner Rollin King.  Dallas to Houston to San Antonio and then back to Dallas.  That launched what has clearly been the most successful US airline in the past several decades. There were a million decisions in the early days, but they were anchored in the ideas on the cocktail napkin. 

Today I want to outline my version of the napkin, the ideas that I will use guide our blog posts this year.  Sure, I’ll get distracted from time to time by news items that merit a commentary (Squirrel!), but these are, I believe, the big ideas that are reshaping healthcare and, I hope, provide a framework as you think about the strategy to control your own destiny.

  1. Reimbursement is changing.  It is not as dramatic as was forecast, nor is there going to be some one-size-fits-all rush to capitation.  But steadily and with increasing speed, how providers get paid is changing. Change the flow of money and everything else follows.
  2. It is all about the ‘platform.’  A hospital is a hospital, a practice is a practice, a drug store is a drug store.  Put a bunch of them together and you just have a bunch of them.  But stitch several different and complimentary things together and you get a platform, a multi-faceted asset that you can deeply embed into a segment of the market and monetize in several ways.  The mega platforms are changing the landscape and you better have a strategy to deal with them.  But you also must now be building more than a practice…you better be working on a mini platform.
  3. The technology is now starting to get interesting.  We’ve done the plumber’s work of digitizing the paper, we’re breaking through the walls and hooking up the pipes so we can share the bits and bytes.  Now, we are starting to see the real potential.  More than efficiency (we sort of skipped that part), now we are seeing real innovation.
  4. With all the above slamming together, we’re seeing the rapid fragmentation of the market into smaller and more precise segments, and the proliferation of new business models trying to own those segments.  The mega platforms want big segments; the mini platforms just need their little corner of the universe.  This is what has happened in many industries that went before us, so in the chaos there is some predictability.

So, this is the lens we’ll be using this year as we work to deliver something here to help you along in your journey. 

And thanks Herb.

Tim Coan
Tim Coan

CEO and founder

Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.