Price transparency is becoming increasingly important as patients take on more responsibility for the cost of their healthcare, and it is just one of the factors influencing hospital financial strategies.
During a panel discussion on financial and alignment strategies at the Becker's Hospital Review 6th Annual Meeting in Chicago, Shenandoah (Iowa) Medical Center CFO Matt Sells said, "The need for price transparency is very apparent." He said the business office at his hospital "has never taken as many pricing calls as it is today." However, even with patients having access to more price information than ever before, Mr. Sells said his hospital is focused on overall quality and not just on being the lowest cost provider.
The other panel participants, who included Brent Lambert, principal and founder of Hanover, Mass.-based Ambulatory Surgical Centers of America, Mark Bogen, CFO of Oceanside, N.Y.-based South Nassau Communities Hospital, and Jeff Rooney, former CFO of Chicago-based University of Illinois Hospital & Health Sciences System, echoed Mr. Sells views on price transparency and quality. "You don't have to be the lowest cost provider," said Mr. Lambert. "You just have to be low cost and high quality."
The panel participants also discussed how their capital expenditures are changing. "We have seen a shift in our rural setting from building infrastructure to technology for capital allocation," said Mr. Sells. "Over 75 percent of our capital allocation for 2015 has been set for technology." Unfortunately, with such a high percentage of the hospital's capital allocation going toward technology, some clinical investments have to be delayed, according to Mr. Sells. On a more positive note, he expects the hospital to spend far less on health IT in 2016.
Mr. Bogan shared the same views as Mr. Sells. He said South Nassau Communities Hospital is probably devoting 15 to 20 percent of annual capital spend to IT. "I don't see how smaller hospitals are able to dedicate the money needed on a consistent basis for IT," said Mr. Bogan.
Scenario planning was another topic the panelists discussed. By providing alternative views of the future against which strategies, tactics and budgets can be tested, scenario planning helps hospitals manage uncertainty to avoid risk and to identify growth opportunities. "In the old days you could do a high, low and most-likely scenario, and that worked when you only had a few variables," said Mr. Rooney. However, with the healthcare industry shifting from fee-for-service to a value-based care environment and the unknowns surrounding the Patient Protection and Affordable Care Act, there are hundreds of variables to be considered when doing scenario planning today, which makes it a "a much more active and dynamic process," said Mr. Rooney.