Major US Hospital Systems 170+ Years Old... Too Old to Change??

This video, presented by Dr. Eric Bricker of AHealthcareZ, delves into the profound age of major U.S. hospital systems and questions their capacity for change in a rapidly evolving world. The central premise contrasts the longevity of these healthcare organizations with the much shorter average lifespan of corporations in other sectors, particularly those listed on the S&P 500. Dr. Bricker highlights that the average S&P 500 company today is only 20 years old, a stark reduction from the 60-year average in 1950. This shift, he explains, is largely attributed to "creative destruction," where new organizations leveraging new technologies, business models, and cultures emerge to replace older, less adaptable entities, citing examples like Facebook, Amazon, Netflix, and Google.

However, the narrative shifts dramatically when examining the healthcare sector. Dr. Bricker points out that major non-profit hospital systems, despite sometimes having newer names or physical facilities, are fundamentally ancient organizations. He provides compelling examples: Ascension, though officially founded in 1999, is a consolidation of entities like the Daughters of Charity and St. Joseph's, which trace their origins back to the mid-1800s. Similarly, CommonSpirit, formed in 2019, merged Catholic Health Initiatives (itself a collection of 13 groups of nuns from the mid-1800s) and Dignity Health (rooted in the Sisters of Mercy from the 1800s). Trinity Health and Providence-St. Joseph's also share similar histories, originating from religious orders in the 1800s and early 1900s. These organizations are not merely 60 years old, but often exceed 170 years in their foundational history.

The speaker emphasizes that while these systems may boast modern buildings and advanced medical equipment, their underlying organizational structures and cultures are deeply entrenched and resistant to change due to their extensive history. Dr. Bricker posits that the older an organization, the harder it is for it to adapt and transform. He questions whether these venerable healthcare institutions are simply "too old to change" and suggests that if American healthcare is to progress, these organizations must undergo dramatic transformation, or new entities entirely may be required. The video concludes by framing creative destruction as a typical sign of progress in other industries, implying its potential necessity for the evolution of American healthcare, akin to the disappearance of companies like Woolworths or Pan-American Airlines.

Key Takeaways:

• Striking Age Disparity: Major U.S. hospital systems are exceptionally old, often tracing their roots back to the mid-1800s (170+ years), significantly contrasting with the average S&P 500 company age of just 20 years today (down from 60 years in 1950).
• Absence of Creative Destruction in Healthcare: Unlike other industries where "creative destruction" drives innovation by replacing old companies with new ones leveraging advanced technologies and business models, the healthcare sector, particularly large hospital systems, has largely been immune to this phenomenon.
• Deep Historical Roots: Prominent non-profit hospital systems like Ascension, CommonSpirit, Trinity Health, and Providence-St. Joseph's are not new entities but rather consolidations of religious orders (e.g., Daughters of Charity, Sisters of Mercy) that established hospitals in the 19th century.
• Organizational Inertia vs. Physical Modernity: While these hospital systems may invest in brand new facilities, ambulatory surgery centers, and advanced equipment, the core organizational culture, structure, and operational paradigms remain deeply rooted in their centuries-old origins, making fundamental change difficult.
• The Challenge of Organizational Age: The video highlights a universal principle that the older an organization becomes, the more resistant it is to significant change, posing a critical barrier to progress and adaptation within the American healthcare system.
• Implications for Healthcare Progress: For American healthcare to truly change and evolve, the underlying organizations must also transform. The speaker questions whether these deeply entrenched, ancient systems are capable of the necessary dramatic shifts or if entirely new models and entities are required.
• Creative Destruction as a Sign of Progress: The video implicitly suggests that the lack of creative destruction in healthcare might be hindering its progress, drawing parallels to other industries where the replacement of old companies by new, innovative ones is a hallmark of advancement.
• The Need for New Approaches: The discussion underscores the potential need for external innovation, new technologies, and fresh organizational cultures to disrupt the status quo in healthcare, given the inherent difficulty for existing, aged institutions to self-transform.
• Inspiring Origins, Challenging Future: The speaker acknowledges the awe-inspiring and philanthropic history of the founding religious orders, recognizing their immense contributions, but juxtaposes this legacy with the present-day challenge of organizational rigidity.

Key Concepts:

• Creative Destruction: An economic term coined by Joseph Schumpeter, describing the process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. In the context of the video, it refers to how new companies with new technologies and business models replace older, less efficient ones.

Examples/Case Studies:

• Major US Hospital Systems: Ascension, CommonSpirit (merger of Catholic Health Initiatives and Dignity Health), Trinity Health, Providence-St. Joseph's.
• Founding Religious Orders: Daughters of Charity, St. Joseph's, Sisters of Mercy.
• Disrupted Companies (other sectors): Woolworths, Pan-American Airlines.
• Successful Modern Companies (other sectors): Facebook, Amazon, Netflix, Google.
• Data Points: Average age of S&P 500 company: 20 years (today), 60 years (1950). Major hospital systems: 170+ years old.