South Florida Hospital News
Sunday October 22, 2017
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January 2011 - Volume 7 - Issue 7

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Hospital Financial Strategies: Innovate, Collaborate to Thrive in Challenging Times

America’s healthcare delivery system is in a period of transformational change, spurred by federal budget pressures and the need for fundamental reform. Exciting and daunting, the next few years will challenge hospitals to create and embrace new opportunities while coping with adversity.

Those that succeed will reinvent their relationships with patients, physicians and the community in the process. Their financial strategies will support a wider vision of hospitals as patient-centered environments where people innovate, collaborate, work in high-performing teams and sustain profitability. With this mindset, hospitals can strategically tackle both the near-term and evolving issues and opportunities impacting hospital finances, including:
 
Collaborate in the Face of Reduced Reimbursements
Reduced Medicare reimbursements will continue to pay providers less, and managed care organizations will likely follow suit before long. Recognizing the continuous need to do more with less, hospitals and physicians can align in new collaborative relationships.
 
Those who do so with a clear focus on enhancing the patient experience and adding value for communities will build staying power.
 
Decreased funding and tough questions about cost efficiency and access to care can bring hospitals and physicians closer to address essential issues. Does the local community have optimal access to care? Do physicians’, clinics’ and the hospital’s information systems readily speak to each other, or is continuity of care being compromised? Are providers duplicating resources?
 
Physician Integration Options
In the years ahead, physician integration will be a key financial and quality of care strategy for hospitals. Nationally, many hospitals are reviving the employment model that crested in the 1990s. At Jupiter Medical Center, we are proactively pursuing a hybrid model, built around clinical integration. This collaboration aims to build the infrastructure needed to operate as a single unit in the marketplace, from clinical protocols to fully integrated, office-based electronic medical records.
 
The clinical integration model is already enhancing care delivery for us while it controls costs and reduces the risk of errors. With an eye on the government’s future readmission rate-oriented payments, we’re working toward hardwiring improvements into our infrastructure to mitigate risk.
 
Ongoing healthcare change makes for an extremely fluid environment that lets hospitals find multiple ways to align with physicians along clinical outcomes and quality of care. Rather than a single solution, hospitals will want to consider employing physicians, creating joint ventures and/or fostering Independent Practice Association models.
 
Some hospitals that achieve significant cost control and improve outcomes through clinical integration may decide to go at-risk on contracts with insurers and work more collaboratively with payers as well.
 
Navigating New Financial Realities
The future of healthcare reform is here now. Healthcare organizations can expect slower growth, a shifting payer mix and even more aggressive positioning for market share. Bundled Medicare payments based on “episode of care” are coming. In test projects underway, large hospital systems in some western states are receiving bundled payments for cardiac and orthopaedic service lines.
 
While it’s financially painful, shifting from fee-for-service to a bundled payment approach may ultimately lead to better outcomes and an enhanced patient experience. Making the most of declining reimbursements and lower payments, hospitals and physicians must work together to develop higher quality and reduce waste and duplication in each of their systems.
 
Meaningful Use Mandate – Be Prepared
Hospitals should act now to head off possible penalties under the American Recovery & Reinvestment Act of 2009, which mandates that providers show “meaningful use” of computerized physician order entry (CPOE) by fiscal year 2013. Hospitals that are making the needed investments in stronger IT infrastructure will be better prepared for the rolling mandates.
 
By 2015, the government will penalize non-compliant hospitals, reducing reimbursements. Meeting CPOE mandates is a complex process, not to be delayed. At Jupiter Medical Center, for example, 2011 marks the fifth year of a full-force, multi-million dollar IT upgrade. We will implement the system hospital-wide this year as an essential step toward certification for meaningful use.
 
Quality Drives the Bottom Line
As financial pressures intensify, hospitals that focus on the patient’s experience throughout the episode of care will become effective competitors. That experience is shaped by each interaction of a care provider or staff member with the patient and patient’s family. As we and like-minded hospitals integrate relationship-based care into our institutional structure, every department – including the business office – has to be considered a patient care center.
 
While quality drives the bottom line, the corollary also is true: a solid bottom line is a “proxy” for quality. In this time of intensive change, hospitals with the most secure balance sheets will be those best prepared to navigate the rough seas still ahead. By reducing variation, improving outcomes, integrating with physicians, and increasing community access to healthcare, hospitals can creatively and systematically achieve both these goals as they position for the future.
John Couris is CEO, Jupiter Medical Center, and Jan Grigsby is CFO, JupiterMedicalCenter. For more information, e-mail cbush@jupitermed.com.
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