Thursday's announcement that Eastman Kodak, the 131-year old pioneer of photography is seeking bankruptcy overshadowed the announcement that the Jane Addams Hull House Association (Hull House), Chicago's 122-year old social service agency which pioneered the delivery of social services, would close its doors this spring. Ironic that two firms of the 19th century, each becoming iconic brands in their respective markets, could not maintain relevance into the 21st century.
"You press a button and we'll do the rest" -George Eastman
Kodak, founded by George Eastman, clearly was the victim of advancing technology. Once the process of capturing and sharing images became divorced from chemical processes, the firm's raison d'être seemingly disappeared. Even if Kodak had been successful in its efforts at selling digital cameras, the low-margin nature of that business would have assured that the venerable brand would only be a ghost of its former self. The failure of Kodak to find new applications for its chemical expertise and voluminous patents has been compared (unfavorably) by some analysts to Corning Glass, an equally storied firm, which successfully adapted its core expertise to exploit new opportunities, created by new technologies.
“Civilization is a method of living and an attitude of equal respect for all people.” –Jane Addams
Simply stated, before Jane Addams the concept of "social service agency" did not exist. At its peak in the early decades of the 20th century, the first Hull House served more than 9,000 people a week, offering medical help, an art gallery, citizenship classes, a gardening club and a gym with sports programs. There were nearly five hundred, Hull House settlements nationally by 1920. Although an initial pioneer in providing social services to immigrants, by 1990 when it was clear that serving those communities could not sustain the agency, then CEO Gordon Johnson, attempted to change the organization's mission to serve foster children.
Ultimately, the agency depended on 85% of its operating revenues from the State of Illinois, and as any eldercare provider knows, exclusive (or near total) reliance on government funds can place an agency in a precarious position. As it turned out, funding for child services experienced cutbacks over the past 10 years, and despite the best efforts by many, on Thursday the Board Chairman announced the Association will close its doors in a few months.
Take-Aways for the eldercare providers:
As I've consistently written about in this blog, eldercare providers are facing dramatic changes. Although it remans critical for providers to understand their brand and the benefits they brings to the market place, they must be prepared to develop a blue ocean, a previously unknown market place. Here are a few examples of changes facing the industry:
- Advancing technology not only effects consumer products. Consider what effect the introduction of passive health and safety monitoring equipment will have on the ability of older adults to live independently at home. What impact will this have on admissions to CCRC's, ALF's and independent living providers?
- With more older adults remaining in their homes, are community-based service providers prepared to meet growing transportation, food assistance, adult day services and case management needs? Will providers be able to provide these services at market-rate? Is government truly prepared to shift dollars to home and community based services?
- For-profit SNF's are increasing the number of Medicare-covered stays at the expense of non-profit SNF's (here). If this trend continues, how will non-profits be able to compete in the coming era where the ability to provide complex post-acute care will be the requisite to obtaining referrals from hospitals? How will this trend impact small non-profit eldercare providers which rely on revenues from their SNF's to subsidize other programs and services?
- Despite the dramatic achievements of the Medicare and Medicaid programs, it is unlikely they will continue in their current forms. SNF providers will be required to meet quality care expectations or face the consequences. Will non-profit providers who historically have higher operating expenses, be able to accommodate new fiscal realities?
What are your thoughts on the subject?
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