Healthcare and Higher Education Revisited (Part 2)Terry Rawls | President, Strategic Transitions Group
Mergers and acquisitions are but one byproduct of this revolution, and while they are an easy target of our focus because of the drama they elicit, there are other, less obvious but no less important connections between the two industries we can watch. For instance:
Technology Creates Efficiencies
Just as in healthcare — where the investment in technology runs into the hundreds of billions of dollars — schools across the country have made relatively huge investments in new recordkeeping and course-delivery systems. A parallel with healthcare is in large-scale efforts such as The Common Application (which, interestingly, has been around for over 35 years) and the National Student Clearinghouse; two examples of early-stage attempts to leverage technology on a broader scale. Check out Degreed and Parchment for two interesting examples of the private sector looking at this challenge, and watch for many more in the coming decade.
The Corporatization of Higher Education Will Continue
In healthcare, mergers and acquisitions created the huge national entities we see today, but in the early stages of their transition, those local hospitals we discussed earlier began to function more as a business than as a charity. This is the process higher education is undergoing today.
In healthcare, hospitals began buying local physician practices as they sought to control their market, which in higher education might look like the proposed merger between the College of Charleston and the Medical University of South Carolina, or the recently cancelled merger between Montreat College and Point University. Large-scale mergers and acquisitions are still over the horizon for higher ed, and some would argue the nature of higher education precludes such a path. It is safe to say higher learning institutions will continue to behave more and more like businesses, and in my experience that is a very good thing for learners.
Big Data Will Ultimately Be Transformative
Healthcare invested heavily in the use of technology in every aspect of its operations, from finance to patient records to creating treatment plans based on experience. While there are certainly pros and cons in this movement, in the long run, it will certainly benefit patients. Check out IBM’s WatsonPaths to see how a Jeopardy-winning supercomputer is now being used to improve decision-making in health care. Higher ed is also investing in big data initiatives, although we are again in the very early stages of this effort with companies such as Pearson at the forefront.
New Professional Groups Will be Created
The changes of the past 30 years in healthcare saw an expansion of professionals engaged in providing care. Stemming from a physician shortage in the 1960s, nurse practitioners and physician assistants — along with a number of other specialized professionals — came into their own during the recreation of the healthcare industry. Today, these well-trained professionals fill gaps in the industry, managing costs and assuring quality care.
In higher education, we see early signs of a similar change as institutions seek to manage costs and assure quality instruction by using more adjuncts. Not wishing to create a firestorm here, my point is that our challenge is to provide training and support for these new, emerging members of the academy so that we, like healthcare, can make the best use of the benefits they bring to the table. (We can argue forever about whether this trend is desirable, but that’s like arguing that gravity can be a real pain when you slip on the latest polar vortex leavings. Adjuncts and physician assistants are with us to stay.) In the end, it really needs to be all about students.
A Fall in Global Rankings
Finally, here is the one that wakes me up in the middle of the night. By the dawn of Y2K, American healthcare — despite two decades of modernization and growth — managed to fall to number 37 in the World Health Organization’s rankings. More recently, Bloomberg placed us at number 46 of the 48 countries considered. Meanwhile, according to Britain’s Times Higher Education, the United States has 77 of the top 200 and seven of the top 10 schools in the world. Not bad. However, the Times reports that they’re tracking a definite West-to-East shift as more Asian schools move up the list. In the meantime, our Department of Education recently announced that American high school students’ rankings in math have gone from 24th to 29th, in science from 19th to 22nd, and in reading from 10th to 20th.
Two points need to be made here:
- Those 77 top-ranked American institutions need to take on the challenges of our high schools, because failure to do so will result in the erosion of their raw material (unless they want to get all of their new students from other countries). This will lead to precipitous falls of their own in future rankings;
- I certainly hope higher ed can find a way to not follow healthcare in this particular area, for all the obvious reasons.
The case, then, can be made that the higher education industry as a whole has many parallels with the healthcare industry, and that the 20-odd-year head start healthcare has on higher ed can help us understand the lessons that might apply to the latter. Perhaps the biggest lesson to be learned, however, is that higher education needs to partner with the people paying the bills to work out compromises that benefit our students and society as a whole. Failure to do so could very well put higher education on the path to mediocrity — and that is not an acceptable outcome.
Just as there was a trick to understanding the relationship between healthcare and higher education, there is a caveat to the conclusions above. Healthcare’s transition took place in an environment of ever-increasing demand as the baby boomers rushed toward old age and failing health. As higher education enters a new era, we’re looking at a flattening of the demand curve, according to a recent report from the National Center for Education Statistics.
Put that with the fact that Congress will almost certainly find ways to flatten the tuition-rate curve and increase the cost of running a higher education institution and we may very well see many, many more of those mergers and acquisitions (and, I fear, closures) over the next 30 years.
Author Perspective: Business