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What the Healthcare Industry Could Learn From The Container Store How are hospital CEOs indirectly impacting patient care via their employees?

By Matthew Wride Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.

The Container Store | Facebook

"If you take care of the employees better than anyone else, they will take care of the customer better than anyone else," Kip Tindell, chairman and CEO of The Container Store, has said. "If the employees and the customers are ecstatic, the shareholders will be ecstatic too."

Related: 5 Looming Obamacare Obligations Every Entrepreneur Needs to Know About

Now, consider applying that advice to healthcare. But moving toward that "employee-first" culture that Tindell is promoting, and substituting "patient" wherever he mentions "customer," may seem counter-intuitive to healthcare administrators.

Suggest to them that they should put "patient" first, and some of them will likely say, "Not necessarily."

And that may make some sense. For years, the only model for compensating healthcare providers has been a complex billing system based on a schedule of predetermined fees for a long list of procedures. Each procedure is assigned a medical billing code, and when a physician runs a blood test, his or her staff finds the medical code assigned to that procedure, then submits it to the patient's insurance company for payment (sometimes called a reimbursement). This system, still widely used, is called fee-for-service.

That model has advantages and disadvantages. One disadvantage is that its cumbersome standardized billing codes require specialized training, which in turn have spawned the creation of a cottage industry devoted solely to medical billing. Estimates are that 20 to 30 percent of a dollar's value in U.S. healthcare is lost in administration and billing.

On the other hand, fee-for-service is straightforward. A healthcare provider renders a service and gets paid a pre-negotiated amount. And, ideally, costs are controlled due to the tension that exists between insurance companies and healthcare providers: Providers want the fee schedule to go up and insurance companies want to keep it the same (or to even implement reductions).

Most agree this tension would function better if the true costs the patient bears were not obscured by health insurance systems.

The Affordable Care Act (ACA), or "Obamacare," tries to address this and a related concern with the fee-for-service model: its incentive for providers to order as many procedures as possible (think about collecting as many billing codes as possible to send to the insurance companies for payment). Consequently, the concern is that a provider becomes unintentionally focused on quantity as opposed to actual patient outcomes.

ACA modifies the traditional fee-for-service model by partially compensating healthcare providers based on outcomes, as opposed to the raw number of procedures being performed. For example, financial penalties now exist for hospitals that experience
re-admissions -- meaning patients re-admitted because they weren't ready to leave the hospital, possibly because their care was hurried or inadequate.

In this way, ACA is attempting to promote quality outcomes rather than focus on the decades-old fight over fees.

Related: The IRS Has Put a Stop to this Obamacare Workaround

With this push toward outcomes-based compensation in healthcare, administrators can no longer afford a "business as usual" outcome. Instead of concentrating just on keeping doctors happy, enforcing staffing policies,handling nursing concerns and promoting the hospital's services, today's hospital CEO needs to focus primarily on creating the best employee experience possible. And this is where The Container Store comes in: It's a model for healthcare administrators!

The reason (backed by our data) is that better healthcare outcomes are tied to a better patient experience. The vast majority of nurses, medical assistants, physicians and other frontline staff enter the medical field to serve people and help make them better. Indeed, the war is won on the front lines of hospital rooms, with their beeping monitors and cups of chipped ice. While administrators are not on the frontlines, they are just as critical, assuming that they "get " that they indirectly impact patient care simply by making the lives of those in the trenches better.

Specifically, they find ways to successfully engage their employees.

Successful business leaders, including healthcare administrators, then, can do more to improve their organizations by focusing on employee engagement, not traditional growth initiatives. Our findings suggest that healthcare administrators should focus on ensuring their employees have meaning in the work they do, autonomy to help their patients, growth opportunities, the ability to impact their patients' lives for the better and a powerful connection to their clinic or hospital as well as to their patients and their families (hence, the acronym MAGIC).

Why should a hospital administrator shop at The Container Store, to see firsthand how the "employee-first" mentality is working for others? Why should that administrator make a point of recognizing that that same mentality will make a difference for his or her organization?

Related: Employee Engagement Is More Important Than the Customer

The answer is that with the Affordable Care Act, the rules are different. One way to respond to these changing rules is to start focusing on your employees. So, healthcare administrators should take care to ensure they give their employees reason to give their very best, every day, to those who need the most important kind of help: compassionate and skilled medical care.

Matthew Wride

COO of DecisionWise

Matt Wride is the COO for DecisionWise, a leadership and management consulting firm. While he claims to be entrepreneur at heart, he can’t quite muster the courage to leave everything and start a cattle ranch in Montana. Instead, he writes and teaches about employee engagement, leadership, and decision-making. His current project is co-authoring The Employee Experience, How to Attract Talent, Retain Top Performers, and Drive Results (Wiley, Q1 2017).

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