Hospital chief executives foresee alliances with physicians and other hospitals as the most important strategic change their organizations need to make to operate successfully in a reformed healthcare environment.
That's among the key findings from a nationwide survey of hospital CEOs conducted for MODERN HEALTHCARE, and it's a trend that's being borne out almost daily in the business pages as more hospitals and other healthcare providers jump on the integration bandwagon. The survey of 200 CEOs, representing hospitals of all sizes, was conducted by National Research Corp., a Lincoln, Neb.-based market research firm.
Half of the executives (51%) surveyed cited integration as their top strategic objective, followed by increasing cost-effectiveness (25%) and organizational restructuring (16%). Farther down the list were increasing the diversity of services, emphasizing preventive services, focusing on customer sastisfaction and boosting managed care.
While only 9% planned to make information systems their primary strategic change, almost all the CEOs cited the need for specific types of data to support their hospitals' operations. For example, 42% said they'll need better cost information to successfully compete under capitation; 32% said they'll need improved outcomes and clinical information; 16% saw the need for more consumer-attitude and patient-satisfaction data; and 14% said they'll need information on successful strategies used by other providers in networking, forming alliances and operating under managed care.
The chief focus. Based on the executives' strategic priorities, their main focus in the next two years will be setting up physician-hospital organizations or other alliances, cited by 39% of the CEOs. Partnering with managed-care organizations was the second most-cited objective (26%), followed by cost-cutting (15%) and installing information systems (9%). Some 4% of the executives believe all the objectives will be equally important (See chart).
Preferred partners. As they prepare to integrate with other providers and form networks, nearly half (45%) of the hospital CEOs said they believe other hospitals will make the best partners to position their organizations for the future. Some 39% favored teaming up with physicians, while 8% chose payers, 2% chose community alliances and another 2% favored specialty providers such as home healthcare agencies.
While hospitals are mentioned as the most desirable partners by the executives overall, looking at the CEOs' responses based on their hospital size provides varying results. For example, at hospitals with 200 beds or more, 46% of the CEOs said they would most likely seek out physician partners, while 33% favored other hospitals. But at hospitals with fewer than 200 beds, the executives chose hospitals over physicians, 55% to 25%.
Attractive traits. When asked to name specific attributes they would look for in a provider partner (the respondents could name two, so totals don't equal 100%), philosophical compatibility and sharing similar goals came out on top (31%), followed by high-quality care (24%), financial strength (21%), strength in the community (20%), availability of unique services (18%) and cost-effectiveness (16%).
When asked who they expected to initiate efforts to forge partnerships, more than two-thirds (68%) of the CEOs believed hospitals will take the lead in putting groups together. Some 15% believed insurers will take the lead, while 4% predicted it would be some type of provider coalition. Only 2% said state or federal government will be responsible for establishing the groups, and only 3% expected employers to fill that role.
Partnership challenges. Operating under capitation-meaning providers are paid a fixed amount per patient or enrollee-was the most-cited concern facing the fledgling partnerships, cited by 41% of the CEOs surveyed. Governance issues were mentioned by 30%, followed by measuring outcomes and patient satisfaction (11%), information systems integration (10%) and gaining trust with the new partners (5%) (See chart).