Why do so many hospitals and health systems shy away from an aggressive growth strategy? We see several typical reasons:
- Disinclination to commit the attention and organization required of senior leadership to execute an aggressive strategy. Aggressive growth is a great idea, so long as it doesn’t require much in the way of resources or create risk for the organization.
- Managing the dynamic with physicians is not a walk in the park. Physicians want to see growth, so long as newly recruited physicians don’t create competition, either perceived or real, for their patient base.
- Uncertainties about the legislative environment. “Let’s wait to see where things end up” before committing to a path forward.
The challenges are real, but so are the risks of sticking to “safe” strategies. Margins are stagnant or decreasing, while fixed expenses are on the rise. Top line revenue growth is the path to success. You can’t cut your way to profitability.
The path forward will continue to be uncertain. And, if you’re waiting for clear answers, you’re in for a very long and potentially costly wait.
In terms of how hospitals and health systems approach defining and executing their growth strategies, here are the biggest gaps in aggressiveness that we see:
Conservative Market Growth. Cautious geographic expansion results in strategies that pick only the lowest of low-hanging fruit and bypass opportunities to compete on access and quality in more competitive market segments. Competition requires resources, but rarely do markets get easier in which to compete over time. Attack the opportunities now.
Inhibited Specialist Recruitment. Recruitment strategies always end up being an exercise in politics. Existing physicians worry about more competition and say, “We’re “not busy enough.” Management team members worry about budgets and say “We still have capacity”. While this can certainly be the case, all too frequently failure to recruit results in business heading out of town when providers can’t get their referred patients seen on a timely basis. Don’t wait for your providers to hit capacity before recruiting – build a growth strategy that shows there will be volume and recruit pre-emptively. Don’t let volume go around you while you’re trying to catch up on recruitment needs.
Slow Incorporation of APPs in Primary Care Resulting in Inadequate Provider Access. Many hospitals around the country struggle with access to primary care resources. Adoption of advanced practice providers (APPs) – particularly nurse practitioners (NPs) – into the primary care setting is the most immediate and cost-effective way to build the provider supply your strategy requires. The NP should not be a “one-of” in your four-physician primary care practice. Hospitals should be working toward a 1:2 ratio of Physicians to APPs in primary care.
Lack of Focus on Patient Retention. Many hospitals lack the capability to measure how good a job they do of keeping patients inside their network, and even fewer manage it aggressively. When you can’t keep patients in your network, it limits the desire to grow that network, resulting in a spiral of inaction. Create a system for routinely measuring your network’s ability to retain patients, and then act on the implications of that data.
Lax Engagement of Employers. Most hospitals want to grow commercial volume – when it’s the only profitable thing that makes sense. However, instead of directly engaging employers and trying to create integrated, meaningful relationships that will result in high value to both the employer and the hospital, we see hospitals pursuing occupational health, workplace wellness and other strategies that result in low impact to both organizations. If your organization is the healthcare provider of choice, tell employers that. Show them the value and cost-savings you can create. Get there before a competitor does.
Under-Resourcing Marketing. When times get tough and margins drop, it’s tempting for hospitals to pull back on marketing resources to make ends meet. However, selling your message, whether through promotional activities, physician liaison resources, or community engagement, should always remain a top priority, and almost always is worth the additional investment. If you build it, they won’t come until you tell them about it.
Yesterday was the best day to start building an aggressive growth strategy for your organization. Today is the next best. Uncertainty and conservativeness must be overcome. Growth must happen.