Each year the American College of Healthcare Executives (ACHE) sends a survey to over 1,000 hospital CEOs in hopes of learning something new about what’s on the minds of our nation’s hospital leaders. For the past 10 years running, the number one concern has been “Financial Challenges.” Beneath this underlying concern exists a myriad of sub-concerns – government funding cuts, decreasing inpatient volume, and increasing costs. While appreciating survey results, we thought it might be helpful to share real CEO conversations we’ve had over the past few months. Most hospital CEOs are usually positive and optimistic; however, we’d be feckless consultants if we didn’t ask the difficult question, “What keeps you up at night?” The following three excerpts are based on real-life (anonymous) conversations we’ve held with CEOs about the true challenges they face and the tough decisions they make.
“The physician practices we bought were making money before and now the mounting losses are creating a snowball effect on the entire health system’s profitability. We’ve got to find a way to stop the bleeding.” — CEO #1
The tough decision here revolved around cutting staff and jettisoning less productive physicians and practices. Though this approach might reverse losses in the short term, it’s often penny wise and pound foolish to opt for the quick fix. Hospitals and health systems have been acquiring physicians and practices so rapidly, it’s nearly impossible to keep up with the varying practice operations and cultures. However, financial sustainability requires more than workforce reduction. A high-performing physician network needs standardized operations, quality control and revenue cycle optimization. Otherwise, practices that have been in business for any length of time will revert back to the way things have always been done. What’s more, the culture of the practice and the network will suffer from having instilled the notion that RIFs are the solution to most financial problems. To make the employed physician network a well-oiled, humming machine, it’s critical to lift the hood on operations, uncover sources of waste and remove them. From front office scheduling to back office coding and collections to the patient touch points in between, inefficiencies need to be brought to light and reconfigured to achieve best practices. This requires a rigorous approach around all the moving parts and MUST involve staff AND physician leaders within each practice. Once the ideal process for one practice is proven successful, it can be applied to other practices in the network.
“I’d like to advertise our employed physician group but I don’t want to upset the independent physicians who are still loyal to our hospital.” — CEO #2
Understandably, the CEO wants to promote his successful and growing physician network but doesn’t want to publicly compete with local independent physicians. He should communicate to independent physicians that the employed network model is working and is distributed around the region enabling access to portions of the community that were previously underserved. Through a physician needs assessment and an analysis of inpatient and outpatient utilization in the area, he can demonstrate there is enough demand for clinical services in the area to support both the employed medical group and the independent physicians on staff. Residents are unlikely to differentiate whether the independent physicians are part of the employed group or simply on the medical staff. Therefore, promoting the employed group will inadvertently promote independent physicians on the medical staff who are listed on the hospital’s “physician finder” webpage as well.
“I’m not sure if we’ll be able to remain viable as an independent community hospital.” — CEO #3
Many hospital CEOs fear that seeking an affiliation with another hospital or health system could compromise the hospital’s culture, diminish control and decision-making in the community, and/or result in a loss of some duplicative administrative jobs. Worse, however, is a hospital closing and cutting off access to care for an entire community along with the loss of every hospital employee’s job. The key for every hospital’s CEO and his or her Board is to understand where the critical needs lie and where the hospital’s strength is in a negotiation situation. These questions can be answered during an organizational strategic planning process where an understanding of needs and future sustainability can be determined.