South Florida Hospital News
Sunday August 25, 2019
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May 2017 - Volume 13 - Issue 11

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Four Areas Hospitals Can Focus on to Strengthen Performance During Political Uncertainty

President Donald Trump and Republicans seem likely to continue efforts to repeal and replace the ACA or at least mandate significant changes to the current healthcare law. While what these revisions or new legislation will look like remains unclear, the pressure on hospitals to further reduce costs while improving quality of care will only increase.

Hospital leaders today must rise above the politics to advance their organization’s missions while also efficiently managing the bottom line. Hospitals and health systems should focus on four key areas to strengthen performance during this time of uncertainty: 

1. Reduce operational costs and improve efficiency – Healthcare providers must have a clear understanding of their cost structure, revenue stream and the areas that have a major impact on margins and then adopt a mindset of relentless cost reduction without diluting quality. For example, labor expenses typically represent 60% of the overall cost structure for any health organization. Hospitals should identify opportunities to create efficiencies in the delivery of services through strategies such as redesigning work processes to use less resources and leveraging IT investments to implement automation. Supply chain is another area of opportunity. Tactics to reduce supply chain costs and improve processes include renegotiating contracts, working with physicians on preference items, and leveraging size and scale to secure lower pricing on supplies and services.
 
2. Rationalize service offerings and programs – Standalone community hospitals will benefit from assessing the programs and services they offer with a critical eye to understand which ones are profitable and will contribute to the enterprise’s long-term financial success. As economic pressures amplify, it will become increasingly difficult to carry service lines that are not profitable. Multi-hospital systems must conduct a similar exercise at a market level to rationalize services and locations so hospitals serving the same population are not offering competing services.Instead of offering a vast array of mediocre services, which does not lend itself to profitable growth, all types of providers should focus on excellence in key service lines.
 
3. Hone in on economies of scale and system integration – As the pace of healthcare mergers and transactions persists, system integration and coordination is critical. To remain profitable, systems must centralize, consolidate and standardize processes and leverage scale to gain competitive advantage in local markets. At a corporate level, systems must remove redundancies and duplication of processes and positions to achieve an efficient and cost-effective enterprise.
 
4. Physician engagement – Renewed efforts to engage physicians will be essential to improve quality, reduce variation and facilitate the shift from inpatient to outpatient care. Providers must focus on aligning physicians and physician networks to the broader organization to improve patient access, coordination of care and case management. These complex but worthwhile initiatives will only be successful and sustainable when clinical decision makers, particularly physicians, are part of the team and held accountable for outcomes.
 
While the future of healthcare policy remains to be seen, continual focus on these four areas will help hospitals and health systems leaders position their organizations for long-term success, regardless of the changes to come.

Ramona Lacy and George Whetsell are Managing Partner at Prism Healthcare Partners. For more information, visit www.prismhealthcare.com.

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