As hospitals face the reality that the Balanced Budget Refinement Act of 1999 package still leaves an enormous financial shortfall, executives are correctly putting much energy into alerting Congress that further relief is desperately needed.
Our elected representatives must hear an unambiguous message that funding levels are inadequate to meet the real costs of delivering patient care. In a market-based financing model, it is critical that the government, the "single payer" for more than half the nation's healthcare expenditures, meet its obligations--particularly since government also plays a major role in defining the benefit plan and regulatory environment, which substantially influence costs.
While these efforts are essential, we must recognize that they are an attempt to control what is intrinsically uncontrollable. Even though Congress and the administration seem to be more open to additional payment relief, what lawmakers decide to do, and when and how they choose to do it, is largely out of healthcare providers' hands. For that reason, I urge that each of us recommit ourselves to managing that which is within our sphere of influence, namely, how we will adjust our strategic, financial and operational plans to mitigate the impact of the losses caused by the Balanced Budget Act of 1997 and its inevitable successors.
Healthcare organizations in the best shape today are those whose leadership has long since recognized that solutions must come from within, from honestly assessing what the reimbursement shortfalls and other external market forces mean to the organization, and adjusting accordingly.
The foundation for success begins with strategic, financial and operational planning based on constant vigilance and ongoing reassessment of both internal and external factors. More than ever, an activist mind-set is needed. We must pursue every leverage point for revenue growth and cost reduction that enhances our ability to deliver the scope and quality of medical care and service our communities expect. This is just as true for the largest healthcare systems as it is for the smallest rural providers.
A common strategic checklist would include:
Quality and service improvement. Quality improvement is not only essential but also is fundamental in attracting patients, physicians and the best employees. Remember that these aspects of operational performance are the heart of the service we provide. In a cost-cutting era in which the low-hanging fruit was picked long ago, it is also the best framework for systematic improvements to yield further efficiencies.
Program development/strategic review. I often hear executives say they have exhausted all of the available opportunities for new programs. I don't believe it. Admittedly, some organizations may have greater potential than others, but the opportunities are there for all of us. Be sure that all sources for ideas have been explored. At the same time, all of us have undertaken initiatives that haven't worked to the degree planned. Pruning and/or eliminating programs, both recent and longstanding, is a must.
Marketing. The debate over the appropriateness and usefulness of marketing has raged for decades. Meanwhile, the successful organizations long ago recognized that marketing is an essential investment. Instead of spending time considering whether to market, put your effort into how much and how to build accountability systems that tell which efforts are producing real results.
Managed care. Inevitably, in a market-based financing model, the pendulum swings back and forth between buyer and seller. Contract negotiations are the place where strategic and long-range financial plans become reality and show their value. Develop contracting and pricing policies based on what you need, not only now but also in the long term.
Treasury. For some organizations, effective treasury management can help them ride out the inevitable swings resulting from shifting public policy. For others, it can be a life jacket. Sound investment policies based on long-range financial goals are essential.
Fund raising. For not-for-profit hospitals, enhanced fund raising is an essential tool. It can also result in a tremendous opportunity to reconnect with the community and remind a new generation of givers that the local hospital is a valuable but threatened public resource.
Productivity/supply chain management. Because healthcare is so labor-intensive, productivity management has always been the No. 1 operational consideration. And it will remain so. Focused efforts are the order of the day. Supply-chain management in the broadest sense of the term can yield meaningful results on an ongoing basis.
Information and Internet technology. Information systems are now available to substantially enhance communication and data utilization within the healthcare team and enhance key processes of care. But first must come the discipline to change existing care processes to obtain the desired results. Yes, updating systems will add costs, but there can be no question of the need for investment in this area.
Identifying good ideas is one thing, but leaders must take action in each of these areas. Toward this end, perhaps the most important executive action is creating and sustaining a culture that blends the history of healthcare with the future, one that preserves and enhances the traditional altruistic reasons why so many people went into healthcare in the first place, while also fostering the organizational and personal change needed to survive. Implementing accountability, evaluation and reward systems that preserve the historical perspective and also foster innovation and a bias for action at all levels is at the core of every successful healthcare organization.