RamaOnHealthcare May 16, 2022

Healthcare and Higher Education: Two Trains on Economic Collision

In my last book, Strategic Business Transformation: The 7 Deadly Sins to Overcome (Wiley & Sons), I stressed the two areas in our lives that if not tamed, would impact our future generations. They are higher education and healthcare.

Mohan Nair, CEO of Emerge Inc.

Mohan Nair, CEO of Emerge Inc.

Dr. Larry D. Large, Founder and Principal of L.D. Large Consulting, LLC.

Dr. Larry D. Large, Founder and Principal of L.D. Large Consulting, LLC.

This interview explores what healthcare can learn from higher education in promoting transformation, driving out inertia, and promoting opportunity to advance learning in each field. To facilitate this convergence, I have requested insights from my good friend, colleague and admired educator and administrator, Dr. Larry Large, author, consultant to several universities, and a thought-leader.

Larry is engaged within the transformation and demands regarding the profound challenges within higher education and the dangers of not changing fast enough. In his most recent book, Higher Education Business Models under stress – Achieving graceful transitions in the academy Authors: Melody Rose and Larry Large (AGB, 2022). Larry stresses the need to redefine business models to re-invent the future needed in higher education. I bring this converging interview to highlight what we must learn from other industries that parallel our challenges in healthcare. Higher Education and Healthcare have strong comparatives, and each is struggling with value and cost.

Mohan: Welcome, Larry. Let’s get right to it. Is higher education doomed if it does not change? Ivy League Institutions seem to live forever. Will it be the smaller independents that are most likely to suffer?

Larry: Thank you, Mohan, for the opportunity to discuss some of the current and emerging issues confronting the higher education enterprise.

Yes, the smaller independents will likely be the most negatively impacted but they will not be the only segment that will struggle. And yes, the Ivy Leagues will be the least affected but will not be totally immune from the need to adjust to a myriad of new dynamics among students and future student demands of colleges and universities.

One of the biggest challenges will be related to the transparency of costs as consumers will want to know more details about where tuition and other sources of revenue are being assigned. Please note: almost all institutions in the country are extensively dependent on tuition as a primary source of revenue.

Mohan: I see tremendous parallels between higher education and healthcare. For each the buyer and the user are separate, subsidies submerge real costs, and the end consumer is not engaged enough to change the dynamics of the institutional dialog to mention a few. What do you see are the elements where current higher education system are failing? Are there parallels to healthcare?

Larry: Yes, I see multiple parallels to healthcare. You have listed some of those. In addition, I see an increasing level of engagement of technology in the management and delivery of the services of both industries. That enables the providers with greater capacity to individualize the services. Technology also increasingly impacts the scalability both for administrative and back-room services available to both healthcare and higher ed.

…I see multiple parallels to healthcare.

Other elements in higher education that currently and will continue to need attention and transformation in higher education include these dynamics:

  1. Demographics: The population of the traditional college-age consumer of higher ed is shrinking substantially. There are now more than 1.5 million fewer students enrolled than 10-15 years ago. The forecast continues to predict additional reductions.
  2. Consumers (students) now have a far greater influence on what is taught and provided on campuses than ever before as the competition for enrollment heightens and campuses provide what the “market” demands.
  3. Students and parents are more rigorously assessing the cost-benefit ratios for college attendance. This has increased as the price (tuition) has exceeded the Consumer Price Index for decades.
  4. Multiple alternative providers have evolved through the issuance of other credentials such as certificates and other endorsements that can be delivered through corporations and/or limited enrollment institutions. Almost all such alternatives are priced lower and take substantially less time to complete. Many of these can be completed via part-time enrollment and on-line.
  5. Student debt levels and credit avoidance cultures have emerged among many groups of potential students.
  6. The business model is changing in multiple ways: This includes mergers, acquisitions, collaborative consortia, a multiplicity of state assisted institutions re-engaging in systems, small private (and some larger campuses) are engaging in shared services with corporations and other municipal or state services.

The business model is changing in multiple ways….

Mohan: We have strong parallels in healthcare. As you pull the thread of business model change, is it technology that will disrupt this current status quo or is fundamental business model change that is the answer?

Larry: Yes, technology is a critical variable and, yes, there are parallels in higher ed and healthcare, in my opinion. Those parallels exist at two levels:

  1. Mission. Both healthcare and higher education function to serve the public good (your third category of wealth creation),
  2. Management. Both require transformative adjustments to the scaling of supporting costs and services.

Both healthcare and higher education function to serve the public good….

Both require transformative adjustments to the scaling of supporting costs and services.

Mohan: Why are premiums rising; why are healthcare costs rising? The same questions occur when we look at higher education. Do you see consistent solutions in higher education that may be useful for us in healthcare?

Larry: Yes, I think there are some productive collaborations between and among the leadership of both industries. The major categories in higher education that are the cost drivers include, but are not limited to:

  1. Escalating marketing costs. Some stats are stunning as campuses are overwhelmingly tuition dependent reach out to optimize enrollment and tuition revenue.
  2. Huge investments in campus amenities. This includes everything from climbing walls to lazy rivers.
  3. Additional campus services such as increased healthcare on campus, new investments in job placement during enrolled periods and after graduation, mental health counseling, and fitness center expansions.
  4. Campus security cost are up owing to concerns of parents about safety on campuses in the wake of campus mass shootings and an increase in sexual assault cases.
  5. Intercollegiate athletics are subsidized at virtually all campuses in the country, with maybe 10 -15 exceptions. These are rationalized based on adding enrollment and alumni donations, among others.
  6. Increases in salaries for Administrators (both salary levels and the number of administrators). Presidents are paid much higher salaries now than 20 years ago. Additionally, Coaches salaries have reached unimaginable levels at some, particularly Division I campuses.
  7. Compliance with federal, state, and local regulators. Title IX regulations and others are prime examples.
  8. The slow processing of campus decisions owing to shared governance systems.

Now to answer your question about how some of that is changing in higher education and may be helpful to healthcare leadership: Yes, is the short answer. At the risk of oversimplification, both enterprises MUST focus on cost controls, but NOT at the expense of compromising the successful outcomes for patients and students! The business models, the delivery systems, and the customization of services will continue to require transformative strategies. While the details will look different between the two, the goal and the need between higher education and healthcare are the same.

…both enterprises MUST focus on cost controls, but NOT at the expense of compromising the successful outcomes for patients and students!

Mohan: The Government has proposed paying for community college. Is there an equivalent in healthcare? Or does the analogy breakdown there?

Larry: No, I don’t think the analogy is lost here. Also, there is an effort underwriting college at some four-year institutions. The obvious parallel is the federal Medicare and Medicaid programs. But the real issue is the cost-benefit-analyses of the public investment(s). Specifically, is the public interest best served by the public paying for tuition and healthcare? Will the economy be better off if there are no student loans to repay instead of buying a house, car, or other adult investment from recent grads? And will more low-income students get an education and meet the economy’s workforce needs? You see the point. In healthcare, the question is will we be better off providing effective care to more low-income citizens who can then contribute more directly and effectively as stronger, healthier individuals as opposed to the lower levels of our health conditions that are compromising effectiveness at work and socially?

Mohan: Professors are the doctors of higher education, but they have tenure and can challenge the system. Doctors and other medical professionals cannot and are victims of the circumstances of their environment. Can the people who deliver care and education change the system from the inside or do the administrators have the power to make change happen?

Larry: My way of answering this question is to say that administrators of both industries must listen to their highly trained, and distinctly experienced providers and learn of their recommendations and/or concerns. But listening is not the same thing as accepting or agreeing with their perspective(s). In both cases they are heterogeneous groups and therefore will often differ in their responses/recommendations. Administrators must listen and sift the counsel to the best interests of the public and of their respective organizations. The cultures of both must accept that leadership will ultimately be responsible for the decisions and professors and physicians will need to embrace and support that structure. In all cases, there will be oversight boards that will have fiduciary responsibility and be responsible for the transformative changes that both must address and implement.

Mohan: Conversely, we speak of consumer-based healthcare and decisions with more transparent information available for consumer to vote with their feet on choices to affect the transformation of the healthcare system. Is that what the higher education academy determines in their own equivalence? Are students driving the change we want to see?

Larry: Yes, consumers are indeed driving a significant proportion of the decisions. As you say they are voting with their traffic patterns and selections of providers in both industries.

Mohan: Why is the comparison between higher ed and healthcare limiting? Where does it breakdown?

Larry: I believe there are multiple places where significant differences exist. Healthcare is oftentimes and necessarily so, required to be reactive to surprise illness, accidents, and unforeseen genetic illness. Higher ed, on the other hand, is necessarily more proactive. But that does not reduce the value of the two enterprises to collaborate in the ways we have discussed in this conversation. There are specifics that we could all identify, I’m sure.

Mohan: Higher education is aspirational while healthcare is one of need and illness. Yet much of our talk on healthcare is about aspirational health and wellness. What advice can you give us in healthcare to bring us to an aspirational preventive focus?

Larry: Educate the public in settings that range from primary education to public media, to provider messages about patient and citizen responsibility to learn nutrition, dangers from illicit drugs, exercise, etc. so that fewer, unnecessary illnesses occur which will lower costs and reduce volume pressures on providers. Higher ed can be a partner to healthcare directly by incorporating such messages and lessons in the curricula of general education. In my view such an effort is fully equivalent to financial literacy being incorporated these days in elementary through post graduate programs. This could be a healthcare equivalent literacy.

Mohan: As an expert in higher education transformation, if you had a warning to the healthcare system, what would that be?

Larry: Never lose your focus on the public good part of your mission. Higher ed does struggle at times to remember that as our mission, but it is essential we both focus on the public good that needs to be delivered. And the enterprise must be managed efficiently and effectively as a way of preserving that mission and reason to be.

Mohan: Further if you had to advise us what would you ask us to consider? What would you tell us not to ever lose sight of in our field of work?

Larry: I would repeat my counsel about the need to stay focused on mission and effective delivery of services. And I would also say this: Both enterprises are doing a tremendous amount of good work and we are delivering some excellent services. So don’t get lost by only focusing on the negative. Can we improve – and yes, and must. Let’s build on the successes and make the transformative change that circumstances are requiring of us both to show society we are effective and caring providers of very essential services.

Both enterprises are doing a tremendous amount of good work and we are delivering some excellent services.

Mohan: Larry, I have worked with you in the field of education for over 16 years and have watched your dedication to the field. I have also watched you tirelessly and very honestly guide the institutions you have served. I hope this divergence to healthcare has been illuminating. These two industries need our focus. Thank you for joining me today.

About Mohan Nair

Mohan is CEO of Emerge Inc, about all things business transformation. @mohanemerge. He is a 3-time corporate executive, 3-time emerging business executive, 10-year Innovation Officer and 3-time author. Contact him at https://linkedin.com/in/mohanemerge/ or book his keynote/moderator skills at Mohanair.com.

About Dr. Larry D. Large

Larry is a retired university president and a professional campus administrator with over four decades of experience. He is president emeritus of Oglethorpe University in Atlanta, served two years as interim president of Sierra Nevada College and in 2010 was interim president of Willamette University. Larry also served as vice-president of the University of Oregon, vice-chancellor of the Oregon University System, Executive VP of Reed College and ten years as VP at Willamette University. Larry was the founding president of the Oregon Alliance of Independent Colleges and Universities (The Alliance) from 2012 and 2016; concurrently he has continued his consulting practice that specializes in strategic and financial planning for public and private colleges and universities. In addition Dr. Large has served on many not for profit boards and commissions.

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