This article focuses on five keys for community hospitals' success in midst of a challenging healthcare landscape.
As we look into 2014, all signs point to a massacre for community hospitals.The new healthcare landscape tends to favor large systems that are organized for managed care, the revenue picture is increasingly challenging, and patients are being more careful with their healthcare spending. Community hospitals also are faced with limited resources to invest in information technology and physician recruitment.
Despite the negative prognosis, there are plenty of things a system can do to put itself in a situation to thrive now and into the future. This article focuses on five keys for success.
1. Hire and invest in great leadership. An independent hospital, more than ever before, cannot simply do the same thing year after year and succeed. Rather, it must constantly be improving its operations, investing in improvements and recognizing changes. Accomplishing these efforts requires really smart, tuned-in leadership. In any organization — and particularly an organization in a changing environment — there is real need for proactive, bright leadership. A board must overinvest to ensure great executive leadership. It must be willing to invest in a team, but also be willing to get close enough to that team to replace leadership as needed. Community hospitals simply cannot afford mediocrity at the top of the organization.
2. Become dominant in two to three areas. One recipe for success is to make the community hospital a place that payers and others cannot avoid and one where consumers/patients directly want to go to. The opposite of this is the community hospital that is slowly eroding in most clinical areas, with none being a beacon of strength or a standout in the community. We constantly encourage community hospitals to focus on a few areas to lead in. This might mean providing the best urgent care or emergency medicine in the area, the best cardiology, the top women's health program or something else.
3. Own and control vs. joint venture. Some hospitals make money and stay in business through owning and controlling resources. Other hospitals leverage their core position by entering into a number of joint ventures. As a general rule, we tend to favor the ownership mentality in the long run, where a system can have more control and be able to make changes as necessary and build a service. In contrast, for some arenas like outpatient surgery, the joint venture model still makes sense.
4. Build exceptional nursing leadership and staff. While hospitals need to constantly reduce staffing costs, there is nothing that makes a bigger day-to-day impression on patients than how the nursing team operates. It may seem less important than physician leadership, the billing and collection, and information technology systems, but in actually generating clarity in a community as to which is the best institution, the simplest and clearest differentiator to a patient seems to be the strength of the nursing staff.
5. Get costs in line. As everyone now says, you cannot have mission without margin. In an era of changing revenues, there is no choice but to manage costs very carefully. One has to maintain a top-flight institution with a focus on rational cost management. More and more institutions are working with consultants to help streamline costs and look for areas of costs saving. We just witnessed a $2 billion-dollar-a-year system seek $70 million a year in savings.
It can be harder to find cost savings in a smaller system, especially as many have exerted rigorous cost containment plans and already found the low-hanging fruit. To survive, community hospitals must approach cost management not only operationally but also from a strategic perspective. This might include more in-depth evaluations of the hospital market, strategic financial planning and service line assessments to identify spending that does not add value.
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Community Hospitals: Why Their Futures Are More Flexible Than You Think