Looking for the secret strategy or market condition that will make your healthcare business grow?
Don't bother. There isn't one.
A new study that ranks the 50 fastest-growing hospitals and hospital systems says it's not what you do; it's how you do it.
"It really comes down to execution and the ability and the desire to be aggressive," said Mark Grube, vice president of Abendshien & Grube, the Northbrook, Ill.-based healthcare consulting firm that conducted the study.
Having a little intestinal fortitude doesn't hurt either.
"The level of growth achieved also required a relatively high risk tolerance among the board and management of those organizations," the study concludes.
Called The Fastest Fifty, the study ranks hospitals and hospital systems according to net patient revenue growth from 1991 to 1996.
Mercy Health System, Janesville, Wis., is at the top of the heap.
A one-hospital system, Mercy Health had a growth rate of 177% during the five-year period, pushing its net patient revenues to just shy of $139 million in 1996 from $50.1 million in 1991.
Rounding out the list at No. 50 is 323-bed Good Shepherd Medical Center, Longview, Texas. The hospital posted a 70% growth in net patient revenues, climbing to $143.3 million in 1996 from $84.3 million in 1991.
The study was done by Abendshien & Grube, along with the Columbus, Ohio-based Center for Healthcare Industry Performance Studies. Also known as CHIPS, the group collects and publishes hospital financial and operating indicators.
Wondering why one of healthcare's mega-systems didn't claim the top spot?
The study looked only at net patient revenues reported under single-provider numbers on Medicare cost reports. That put the focus on individual facilities.
Besides ranking the providers, the study looks at some of the business strategies these providers used and why they were successful.
The 50 had a median annual compounded net revenue growth rate of 13% for the five years. Comparable hospital provider organizations had a median growth rate of about 6% for the same period.
The study's list of 50 was derived from a group of 863 hospitals, which generated net patient revenues of more than $100 million in 1996.
Other caveats about the study:
It excludes hospital mergers as a source of revenue growth.
It includes only providers with positive operating margins. That factor was designed to exclude organizations that achieved growth at the expense of profitability.
The findings call Mercy Health a case study of a system with an aggressive vision.
In the past decade, Mercy Health has transformed itself into part physician practice management company and part outpatient services company, which "happens to own a hospital," said Javon Bea, president and chief executive officer.
Its 238-bed hospital is Mercy Hospital in Janesville.
By integrating physicians, Mercy Health says it has broadened its reach with 32 ambulatory-care centers that serve patients in Wisconsin and Illinois.
And, "the growth has continued to skyrocket," Bea said. He expects 1998 net patient revenues to top $200 million.
The study makes some general market observations about the 50:
They tend to be concentrated in Texas, the Southeast and eastern parts of the U.S. Only four providers are west of the Rockies, where managed-care penetration is higher.
About 60% of the providers are in markets with less than 24% managed-care penetration.
Many face limited competition, with about 50% in counties with two or fewer competitors. However, nearly 25% are in markets with 10 or more competitors.
Twelve providers are in high population growth areas, whereas nearly 10% are in shrinking markets.
Though unfavorable market conditions can impede growth, favorable market conditions don't guarantee anything, the study says.
"No matter what your situation . . . all is not lost; there are things you can do," said William Cleverley, president of CHIPS.
But, he warned that "no matter how good your situation, don't think you have gained everything."
Besides expanding their physician base, the 50 used other strategies including expanding geographic focus, diversifying and adding more sophisticated services.
Waukesha (Wis.) Memorial Hospital is one of those providers that beefed up its services.
The 307-bed hospital developed an interventional cardiology program, and in December 1991 it did its first open-heart surgery.
Now the hospital performs about 400 open-heart procedures annually.
The cardiology program accounts for most of the hospital's growth in net patient revenues, said Bob Mlynarek, vice president of finance for Waukesha Memorial.
By 1996, Waukesha Memorial's net patient revenues had increased 83%, to $132.5 million, from $72.2 million in 1991.
For these 50 providers, pulling off their business plans requires, among other things, strong, stable leadership and dedication to strategic planning.
For example, more than half of the providers have CEOs who have been in their jobs for more than eight years.
"It's the effectiveness of management," Cleverley said.
While being aggressive appears to be the key, not every provider can do that.
"There are a lot of organizations that pay lip service to the idea of being aggressive and growing," said Grube.
The study concedes that rapid revenue growth is not what every provider wants or needs.
"We believe that it is important to remind ourselves that growth, in and of itself, is not a very compelling goal," the study says. "Rather, growth may be considered a necessary ingredient to a broader organizational vision."
Those interested in a copy of the study can call Abendshien & Grube at 847-509-0300.