Marion-based Deaconess Illinois, part of Evansville, Ind.-based Deaconess Health System, has taken a collaborative approach to margin enhancement that goes beyond the C-suite.
Hospital margins nationally are moving toward pre-pandemic levels. However, the Midwest was the only one region to see a negative average profitability change from 2022 to 2023, according to data from the Jan. 30 Kaufman Hall "National Hospital Flash Report."
To navigate these and other financial challenges, Deaconess' four-hospital Illinois region sought to develop a margin enhancement plan to increase revenue and lower costs.
The CEO and C-suite team did not develop a plan on their own, according to the region's president, Will Davis. Instead, leaders across departments, including respiratory, imaging and lab, along with the C-suite and front-line employees, worked together on an approach.
"It's not just, 'They're making me do X, Y and Z,'" Mr. Davis told Becker's. "It's everybody coming together with the strategy and focus of, 'Here is our target. What can we do collectively to meet our margins for the year?'"
He acknowledged that many organizations are seeing diminishing margins, and there is a balance needed to ensure plans do not stifle growth opportunities.
But the most important part of the initiative was a shifting mindset and ingraining in the hospital culture that it would be efficient on the dollars the hospital has and will monitor those expenses, he said.
"It's all hands on deck," he said.
Through this approach, one of the region's hospitals, Mount Vernon, Ill.-based Crossroads Community Hospital, identified service contracts on equipment that were going to cost $100,000. But the hospital was able to reduce the cost to $12,000 after negotiations and leveraging regional strength, Mr. Davis said. That equates to an $88,000 net savings.
"That may not have been identified solely by the C-suite. However, getting those front-line workers involved, that adds up quickly," he said.
"Through this activity and through some regionalization, it was a great example of what you can do."