Lessons from the Airline Industry

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Great leaders (like great health IT solutions) are able to access relevant information across the breadth of industries (and platforms), discern pattern in chaos, and transmit the resonant truths to those they lead. Warner L. Thomas, who took the reins at Ochsner Health System as president and CEO in 2012, likes to talk about the parallels between health care and the airline industry with his management team.

When he opened the recent HIMSS meeting in New Orleans on March 4, he shared the following: In 1985, the top three airlines (United, American, and the defunct TWA) owned 40% of the market, the industry transported 460 million passengers and employed 546,000 people, and you had to pick up a phone and make a reservation with the airline or a travel agent. In 2010, the top three airlines (United, Delta and American) owned 70% of the market, the industry transported 700 million people and employed 10,000 fewer people (536,000), and they succeeded in reducing costs per mile flown while fuel costs soared 240%.

How do they do that? he asked. How do the airlines serve more customers with fewer employees, and do it all for less cost per mile than they did in 2007, despite increased fuel costs?

The airlines, Thomas discerned, did three key things that health care must do: They removed excess capacity, shifted a significant share of the front-end work to their customers, and collect and analyze a massive amount of data about operations and our preferences.

“We do a bunch of their work for them now,” Thomas said. “And we like it.”

All of us of a certain age remember initially grousing about not being able to connect with a human being, but that was before we decided that the computer experience was more effective and offered more control by way of seat maps and self-service kiosks.

“How do we get our people to book their own appointments, check their results online, take all that work away from us, so we can either redeploy those people or do what the airlines have done: They’ve grown, tremendously, with the same work force,” Thomas asked.

More Low-margin Business

Ochsner will forfeit $1 million monthly when the 2% pay cut mandated by sequestration kicks in on April 1, and the days of shifting the burden to commercial insurers are behind us. “The problem is, the affordability gap for commercial insurance is widening significantly,” Thomas said. “For middle class America, health care is becoming unaffordable.”

A further challenge is the aging of the population and the shift of high-margin business (commercial insurance) to low margin business (Medicare), not to mention a good deal more Medicaid patients.

Change is imperative, Thomas said, but so it attitude. “If we are not optimistic and energized about the challenges in front of us, we will not be successful,” he urged.

As you navigate the unfamiliar waters ahead, look for inspiration in other sectors of the economy. “We need to look at other industries and other companies that have figured this out,” he said, citing Walmart, which collects 2.5 petabytes of data hourly about its customers. “It’s not like we have to create this stuff, it’s all out there. We’re not bringing it to health care.”


Cheryl ProvalCheryl Proval is the editor of Health CXO as well as vice president of publishing for imagingBiz and editor of Radiology Business Journal and RadInformatics.