The current economic and political climate has placed additional pressure on beleaguered hospitals that have faced thin margins for the last several years.
Staff shortages are leading to capacity issues and increased wages to stay competitive; inflation has caused drug and medical supply prices to rocket without a similar increase in reimbursement from insurance companies. Medicaid cuts loom and new executive orders from President Donald Trump have directed several changes affecting hospitals since he took office in January.
What can executive teams do to stay ahead of the curve?
Steve Purves, president and CEO of Phoenix-based Valleywise Health, has been keeping a close eye on possible Medicaid cuts and changes to the Affordable Care Act. Valleywise is a safety net hospital relying on government programs and supplemental funding to support its teaching program and provide care to the uninsured.
“Anything that happens to Medicaid, the reduction in federal funding for Medicaid programs, has a significant adverse impact on our financial status,” said Mr. Purves on an episode of the “Becker’s Healthcare Podcast.” “We’re very concerned about what we’re hearing about Medicaid cuts, especially to safety net hospitals. In addition, we’re concerned about what might happen to make the Affordable Care Act and the health exchange plans that many people rely on to receive affordable insurance coverage. If there are reduced subsidies related to that, the fear is they would either become uninsured because they make too much to qualify for Medicaid but not enough to afford premiums for health insurance.”
Mr. Purves said his team is constantly planning; revising their three-year plan is a “constant, iterative process.”
“We have to live within our means. We have analysis about what we need to do in order to continue to sustain our operations should major supplemental funding sources dry up. We can’t do everything without the financial means to do so,” he said.
His team is tracking how much funding and subsidies each program requires and figuring out which programs make the most positive impact to the community. If the system has shortfalls that need balancing, they’ll know which programs to move forward with. The health system is also turning more to philanthropy to cover funding gaps.
Jeff Cohen, MD, executive vice president and chief clinical operating officer at Hartford (Conn.) HealthCare is keeping a close eye on how tariffs and executive orders will affect hospital operations and financial stability.
“What [tariffs] amount to is more inflationary pressures, and that puts pressures on our supply chain. We are continually looking at how to minimize that, how to look for places that will avoid those tariffs, or if not avoid them, minimize them,” said Dr. Cohen on an upcoming episode of the “Becker’s Healthcare Podcast.” “We have the rising costs for all types of medications and pharmaceuticals that are separate from even the inflationary pressures of the tariffs.”
Dr. Cohen said his head spins every day as he tries to keep up with new policy changes and anticipate where trends are headed for the future. There are many programs being launched or paused, and possible cuts to Medicare and Medicaid would have a tremendous negative impact on the system.
Strong leadership can overcome these challenges. Jeff Flaks, CEO of Hartford HealthCare, “leads from the front” and inspires his team to follow.
“Optimism is really important, even in challenging times, but acknowledging those difficult times is really important. It doesn’t help to blindly say everything’s fine when people know that it’s not,” said Dr. Cohen. “We have to be honest. We have to always use transparency and it helps to show vulnerability as a leader.”
Albert Wright Jr., president and CEO of West Virginia University Health System, is applying the lessons he learned over the last decade at the helm of the academic system, growing it from a five-hospital system to 25 hospitals in the last decade and adding a health plan, to thrive.
“That’s a remarkable amount of growth in a short period of time, and many have asked how we have achieved and sustained it,” he said. “The answer is that the system’s leadership team and I have learned that it is imperative for us as healthcare leaders to be bold decision-makers in order to move our organizations forward.”
But the right path forward isn’t always apparent. With new possible executive orders, mandates and pay cuts looming, health systems have to stay nimble and be willing to try new things.
“We have developed a high risk tolerance, which is especially important now when there is so much uncertainty in Washington, D.C., and constant threats to the funding sources upon which so many hospitals, including ours, have come to depend,” said Mr. Wright.
Tim Hingtgen, CEO of Community Health Systems in Franklin, Tenn., told Becker’s the biggest lesson he learned in the last few years in the rapidly changing healthcare operating environment has been to focus on the future.
“It is essential for leaders of healthcare organizations to see beyond day-to-day operational priorities, and redirect energy to planning for what’s on the horizon – and then share the plan,” he said. “Our leaders and team members need to know exactly where we’re headed and how to get us there.”
Last year, CHS refreshed its multiyear plan and invested in communication strategies around the renewed priorities to ensure organizationwide clarity, alignment and enthusiasm.
“The early returns have been notable, including record employee retention levels, accelerated clinical outcomes improvement, and strong value and revenue growth,” said Mr. Hingtgen.