Hospitals are in trouble. Why? Because the conventional wisdom on how to respond to the transition from fee-for-service to value-based payment programs does not seem to be working.

Consultants insist that consolidation of independent hospitals into regional integrated systems, employing physicians and assuming more financial risk will lead to success. But the results so far are not promising.

MD Anderson Cancer Center in Houston lost $266 million on operations in 2016, and Partners HealthCare in Boston lost $108 million on operations in the same year, according to an articlefrom the Harvard Business Review. Cleveland Clinic, meanwhile, experienced a 71% decline in operating income for 2016, and Providence St. Joseph Health on the West Coast reported a $512 million drop in operating income and a $252 million operating loss in 2016.

Seven years ago, I anticipated this development and proposed that hospitals must totally rethink their mission and strategy by becoming Community Hubs of Wellness and Health. The traditional clinical delivery system model—organized around a centralized hospital that provides diagnosis, treatment and disease management—simply no longer makes sense.

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