The Patient Protection and Affordable Care Act has created an impetus for hospitals to improve efficiencies, squeezing as much waste out of their processes as possible, while improving quality. Today, market pressures affecting hospitals include: the shift of Medicaid payment from per diem to DRG-based, declining reimbursement, expenses growing faster than revenues, threats from competitive health systems and the shift to value-based purchasing. These factors conspire to demand 20-40 percent improvement in hospital cost positions over the next three to five years.
Accordingly, many hospitals would like to identify strategic cost reductions and service quality improvements across their administrative, financial, operating and clinical units to sustain operations in the face of flat or declining reimbursement. Frequently, hospitals and health systems seek advisory services to provide an independent assessment of potential opportunities, development of transformation plan, implementation support and construction of an evaluation and monitoring framework.
Interviews with the hospital and health system executive leadership teams, most notably with the CEOs, COOs and CFOs, have uncovered a genuine sense of urgency for anticipated operational, clinical, financial and cultural changes and benefits of transformation.
Critically important to the success of transformation engagement is sensitivity to how this may be viewed by hospital employees, many of whom have deep and uneasy feelings resulting from a misguided effort forced upon years ago. Care to not reopen organizational scars should be a principal concern of the CEO and the transformation team.
Several principles should be used by CEOs to guide this type of transformation:
Utilizing a proven approach to business and clinical transformation projects helps provide the best results to hospitals. Business and clinical transformation can be divided initiatives into four phases:
Each phase is divided into four elements creating an effective and self-reinforcing roadmap to transformation. As important as the phasing of the initiative, is a domain stratagem, which includes: staff engagement, process innovation, change management and hardwiring excellence (see diagram below).
Recognizing the need for speedy and effective action, CEOs should consider using an integrated (overlapping) timeline for the four phases of the engagement to be accomplished within 36 to 48 weeks.
Our experience at BusinessFirst has taught us that the initial commitment to significant change — and the leadership and energy devoted to it over sustained periods of time — are the most important factors underlying institutional success. While some circumstances may warrant broad sweeping change, often, lasting improvements are more likely to be achieved through a planned sequence of "digestible" and sustainable changes that sum to transformational change. A commitment to continuous improvement and an ongoing effort to evolve the structure to ensure consistency with strategy and to increase effectiveness, efficiency and flexibility are the dominant factors of organizational effectiveness.
Akram Boutros, MD, FACHE, is the president of BusinessFirst Healthcare Solutions. He is a healthcare executive with 20-year track record of success leading hospitals and health systems. BusinessFirst specializes in interim management, clinical transformation and physician integration services to succeed under health reform.
Total Cost of Care Contracting: A Proven Clinical Transformation Catalyst
Accordingly, many hospitals would like to identify strategic cost reductions and service quality improvements across their administrative, financial, operating and clinical units to sustain operations in the face of flat or declining reimbursement. Frequently, hospitals and health systems seek advisory services to provide an independent assessment of potential opportunities, development of transformation plan, implementation support and construction of an evaluation and monitoring framework.
Interviews with the hospital and health system executive leadership teams, most notably with the CEOs, COOs and CFOs, have uncovered a genuine sense of urgency for anticipated operational, clinical, financial and cultural changes and benefits of transformation.
Critically important to the success of transformation engagement is sensitivity to how this may be viewed by hospital employees, many of whom have deep and uneasy feelings resulting from a misguided effort forced upon years ago. Care to not reopen organizational scars should be a principal concern of the CEO and the transformation team.
Several principles should be used by CEOs to guide this type of transformation:
- Address the human side of change systematically.
- Change starts at the top and begins on day one.
- Real change happens at the bottom.
- Confront reality, demonstrate faith and craft a vision.
- Create ownership, not just buy-in.
- Practice targeted over-communication.
- Explicitly address culture and attack the cultural barrier.
- Prepare for the unexpected.
- Speak to the individual as well as to the institution.
Utilizing a proven approach to business and clinical transformation projects helps provide the best results to hospitals. Business and clinical transformation can be divided initiatives into four phases:
- Assessment and benchmarking;
- Transformation plan development;
- Implementation support; and
- Evaluation and monitoring.
Each phase is divided into four elements creating an effective and self-reinforcing roadmap to transformation. As important as the phasing of the initiative, is a domain stratagem, which includes: staff engagement, process innovation, change management and hardwiring excellence (see diagram below).
Project design and phasing for business and clinical transformation
Recognizing the need for speedy and effective action, CEOs should consider using an integrated (overlapping) timeline for the four phases of the engagement to be accomplished within 36 to 48 weeks.
Our experience at BusinessFirst has taught us that the initial commitment to significant change — and the leadership and energy devoted to it over sustained periods of time — are the most important factors underlying institutional success. While some circumstances may warrant broad sweeping change, often, lasting improvements are more likely to be achieved through a planned sequence of "digestible" and sustainable changes that sum to transformational change. A commitment to continuous improvement and an ongoing effort to evolve the structure to ensure consistency with strategy and to increase effectiveness, efficiency and flexibility are the dominant factors of organizational effectiveness.
Akram Boutros, MD, FACHE, is the president of BusinessFirst Healthcare Solutions. He is a healthcare executive with 20-year track record of success leading hospitals and health systems. BusinessFirst specializes in interim management, clinical transformation and physician integration services to succeed under health reform.
More Articles From Dr. Akram Boutros:
3 Tips for Implementing Strategic Changes During Hospital TransactionsTotal Cost of Care Contracting: A Proven Clinical Transformation Catalyst