Unlocking value creation in networked healthcare organisations — interview with L.E.K. Consulting
Healthcare providers across Europe are facing growing pressure from ageing populations, staff shortages, chronic disease and rising costs. In response, large provider groups increasingly need to operate as coordinated networks that use scale, data and technology to improve performance and patient care.
Ahead of a Breakfast Briefing in Paris on 24 March, HBI spoke with Jean-Philippe of L.E.K. Consulting about why networked value creation is becoming essential, and how service strategy, care delivery and digital tools can help healthcare organisations improve efficiency and outcomes.
HBI: Network value creation is now non-optional. Could you start by explaining why this has become urgent rather than just a strategic opportunity?
Jean‑Philippe: There are a few factors. First, healthcare providers must invest to modernise themselves, which often makes it logical to network and build a larger footprint rather than just a few isolated sites.
Second, there is downward pressure from payers on the fees providers can charge, which constrains revenue per patient. On the cost side, there is inflation, wage increases and shortages of nurses and consultants, which can drive up costs. Without careful cost management, margins shrink.
There is also a scale effect from having a network. Purchasing can be optimised across pharmacy, medical equipment and capital expenditure. Network-based value creation is therefore critical because there are constraints on both revenue and cost.
It helps address margin pressures and allows services to be added across the network. By sharing resources between sites, costs can be reduced and more can be invested in patient care.
HBI: When building a specialty-level fact base, what metrics do management teams often misread?
JP: Understanding patient flow is crucial, what I call the “inventory” of patients. Key metrics include cycle time, length of stay, theatre utilisation and bed usage. Measuring these helps identify inefficiencies and accelerate patient throughput, generating additional revenue.
Comparisons within the same group or against external benchmarks highlight best practices and help close performance gaps. While demographics or regional patient bases may limit total improvement, having a detailed fact base allows an actionable plan and clear visibility on what can realistically be improved.
HBI: And a true hub-and-spoke model, what does that look like in practice?
JP: The hub houses experts for complex procedures, while preparation and post-treatment services take place at spoke sites. This is important because many clinical facilities are saturated. Moving some services to spokes increases efficiency and capacity at the hub.
For example, a private hospital group reduced on-site storage and relied on more frequent warehouse deliveries. This freed up space to create additional outpatient rooms and increased activity without expanding the facility footprint.
HBI: So this shift toward outpatient and day-care settings, does it improve margins or is it primarily about competitiveness?
JP: Both. It allows the hub to operate more efficiently and manage pre- and post-treatment care at marginal cost, improving overall throughput and cost efficiency.
HBI: Is this model transferable across geographies?
JP: Yes, it works in France, the UK and the Middle East. Density and travel distance matter, but the principle applies broadly. Oncology is a strong example. Patients may have surgery at one site and radiotherapy nearby. Post-acute care also benefits from proximity to patients’ homes.
HBI: Why does this model appeal to private equity?
JP: Private equity accelerates growth by providing capital and managerial expertise. They are particularly effective for network expansion, margin optimisation and acquisitions, rather than starting from scratch.
HBI: And remote monitoring or digital aftercare, how investible are they in Europe today?
JP: They are promising, especially when integrated with network optimisation. They can deliver marginal cost benefits and incremental revenue, although trade-offs exist if they require maintaining redundant facilities. Private equity often sees them as an adjacent growth opportunity.
HBI: What does best-in-class digital patient engagement look like?
JP: Fully digital end-to-end patient journeys improve efficiency and patient trust. For example, in radiotherapy, digitalised planning and SMS communication reduce manual work and improve responsiveness, which enhances the patient experience.
HBI: You also mentioned growth comes from deliberately choosing where to play. Can you elaborate?
JP: Sometimes hospitals try to expand activities that are not profitable, which creates hidden losses. Using activity-based costing, we identify underutilised areas and decide whether to transfer them to other providers. This stops losses and maximises the potential of the existing network.
HBI: Do investors value patient experience as a revenue driver, or primarily as a cost line?
JP: Increasingly as a revenue driver. For instance, post-acute physiotherapy or wellbeing services such as nutrition and adapted gym classes can attract patients and generate additional revenue.
HBI: Where have you seen AI deliver the most measurable ROI?
JP: It is still early, but AI is effective once providers have digital medical records. It automates complex tasks that involve uncertainty or large volumes of information, particularly in non-clinical functions such as billing or theatre scheduling. This reduces errors, captures revenue and optimises resource use.
HBI: Which operational levers deliver the fastest EBITDA impact?
JP: Non-clinical costs often have the largest and most immediate impact because clinical processes are heavily scrutinised. Automation and AI can reduce labour and spending costs, optimise space usage and redirect resources to revenue-generating activities. Procurement, such as switching to generics, is another quick lever.
HBI: Any final thoughts on value creation?
JP: Referral management is key. A smooth interface for consultants to submit referrals and for facilities to process them can capture a larger share of potential patients, which directly affects growth.
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We would welcome your thoughts on this story. Email your views to Rakshitha Narasimhan or call 0207 183 3779.
