Although hospitals continue to merge and consolidate, they've "barely begun" to make critical changes in service delivery and haven't consolidated services "in the interest of more effective care," a new survey has found.
And while managed care continues to reshape healthcare delivery, the survey finds "wide gaps" in physicians', hospitals' and patients' understanding of managed care's impact.
These are among the most remarkable and troubling trends spotted by the consulting firm of Deloitte & Touche in its biennial hospital survey. The 1996 survey, which reflects the opinions of 1,020 hospital executives, attempts to identify major trends shaping healthcare delivery. Deloitte & Touche will release a report of the survey this week.
Hospitals and physicians are making far more changes today than when Deloitte & Touche started tracking industry trends in 1986, said Raymond J. Cisneros, national healthcare partner in the firm's Philadelphia office. Forty percent of respondents to the 1996 survey said their hospitals are part of a larger healthcare organization; 16% said they joined a larger organization in the last two years.
Yet the real challenge of combining services to achieve greater efficiencies remains largely untouched. Among hospitals that joined larger organizations in the past two years, 61% of them have not combined any services.
"Where they have combined services, it's primarily been on the administrative side," Cisneros said. For example, 31% said they consolidated accounting and finance functions and 28% combined billing and collections.
Among hospitals that joined larger organizations, a mere 7% of respondents say patient services were reduced or eliminated. After merging or being acquired, many hospital executives take the view that "they've just expanded their service area," but their business stream hasn't gotten any larger, Cisneros said. "So I think they're still thinking as they have for years-(that) bigger is better."
Hospitals traditionally are slow to change, but in today's environment, "they're just not moving with the speed they have to," Cisneros said.
The survey also noted a move away from the physician-hospital organization model. Some 37% of hospital executive respondents said they don't plan to have a PHO, compared with 13% in 1994.
Cisneros said the dynamics that have helped shape PHOs may be changing. For instance, heightened physician practice acquisition activity could be affecting PHO development. In addition, hospital acquisitions could be squelching PHO development and causing physicians to be less anxious to make commitments, he said. And it may be that hospitals haven't acted because the pressure to contract with managed-care organizations hasn't yet become intense. The report said capitation still represents less than 10% of hospitals' revenues.
However, managed-care and capitation contracts are growing, the survey found. On average, 99% of inner-city hospitals have HMO arrangements, up 15 percentage points from 84% two years ago. Rural areas experienced the largest increase, with 69% reporting HMO arrangements in 1996, compared with 45% in 1994. And within the next two years, respondents expect 84% of hospitals will have capitated revenues.
But "they don't seem to be as prepared for managed care" as they need to be, Cisneros said. Asked about their physicians' perceptions of managed care, 82% of survey respondents said doctors have only partial knowledge and understanding of the impact on medical practice. An equal percentage said their physicians partially "buy in and support" managed care, while just 6% are fully willing to participate.
Similarly, hospital executives said just 7% of their employees really understand the impact of managed care on their work, while 89% have partial knowledge. And nearly a third of respondents (32%) believe patients have no knowledge and understanding of managed care. A mere 1% believe their patients are fully informed.
Unless something is done to bring ill-informed hospital employees and physicians up to speed, hospitals could be at a "financial disadvantage" because they will be unprepared to deal with the effects of managed care, Cisneros warned.