The nations best performing healthcare systems continue to improve efficiency and have the bottom lines to show it, judging from results of a yearly survey of integrated health networks.
Improved occupancy, well-integrated information systems and strong margins marked the results for the 11th annual ranking of health system efficiency and performance by Yardley, Pa.-based Verispan, a healthcare data and consulting firm. The ranking comprises the 100 most integrated networks out of more than 580 health systems that are graded on operations, quality, scope of services and efficiency. Criteria changed slightly this year to require a greater number of services for the networks, such as stroke centers, to demonstrate comprehensive care.
Subhash Seelam, Verispans senior market manager for acute-care networks and contract administration, says networks are relentlessly trying to cut costs and eliminate waste to improve access. More than half, 54%, of the top 100 improved scores by better managing occupancy rates and by adjusting staffing to meet fluctuating demand. They are trying to optimize their resources, he says. Roughly one-fourth of the top 100 scored the maximum points for information system integration, he says. Of the roughly 580 systems surveyed, 20% reported operating margins of 10% or more. In the top 100, a little more than one in four posted double-digit margins, Seelam says.
This years three highest-ranked systems did not change from 2007but their order did. ProMedica Health System claimed the top spot after placing No. 3 in 2007. The seven-hospital, Toledo, Ohio-based system ousted last years No. 1, St. Johns Health System, Springfield, Mo., with a score of 93.7 on a 100-point scale.
St. Johns, a six-hospital subsidiary of the Sisters of Mercy Health System based in Chesterfield, Mo., ranked No. 3 with a score of 92.03. Once again, Intermountain Healthcare, an 18-hospital system based in Salt Lake City, placed No. 2 this year with a score of 92.72.
Thats not to say this years overall results didnt show some volatility. Ten systems that ranked among the top 50 most integrated networks in 2007 experienced a drop of at least 20 spots, including four in last years top 20. Presbyterian Healthcare Services, Albuquerque, fell to No. 30 from No. 4. Wheaton Franciscan Healthcare, Glendale, Wis., dropped to No. 84 from No. 12. Health First, Rockledge, Fla., ranked No. 45, down from No. 15 a year earlier. Sharp HealthCare, San Diego, landed at No. 51 after placing at No. 18 last year. Seventeen new systems landed on this years list compared with the 2007 ranking.
Meanwhile, 13 systems included in last years rankings rose in the ranking by at least 20 spots.
Bon Secours Richmond (Va.) Health System jumped to No. 23 this year from No. 68 in 2007. The four-hospital subsidiary of Bon Secours Health System, Marriottsville, Md., has invested in technology integration and expanded services in the past two years. The Richmond system has steadily expanded its employment of primary-care physicians and specialists during the past 18 months, a growth strategy Chief Executive Officer Peter Bernard says will continue. The Richmond systems network includes roughly 115 doctors. Efforts to prepare for an electronic health record continue, Bernard says, and the system anticipates conversion beginning next month. Bernard says the systems deliberate improvement and integration efforts have yielded results. Weve got outstanding employee engagement, which has made us the regions employer of choice, along with the strength of our clinical programs and high patient-satisfaction results, he says.
Of the 13 networks that rose significantly in the ranking, one landed in the top 10. Tacoma, Wash.-based MultiCare Health System jumped from No. 56 last year to No. 8.
The not-for-profit system has seen its financial performance steadily improve in recent years and successfully acquired a hospital in nearby Puyallup, Wash., nearly 18 months ago. MultiCares operating margins rose to 8.8% for the first 11 months of 2007 on operating revenue of $1.1 billion. That compares with operating margins of 7.4% and 3.4% in 2006 and 2005, respectively.
The financial figures retroactively include 199-bed Good Samaritan Hospital, Puyallup, which MultiCare acquired in August 2006. Credit analysts at the time noted that the deal presented a sizable risk, but with significant potential. Good Samaritans rocky finances, tension between doctors and management, and limited investment in technology and equipment threatened to undermine MultiCares bid for the struggling hospital, Moodys Investors Service stated in a November 2006 report.
Analysts also reacted uneasily to MultiCares plans to pour $150 million into renovating and expanding Good Samaritan. Though necessary, we believe there is considerable risk associated with such a large project at a facility that has had financial difficulty and is now being integrated into a new organizational structure, according to the report.
Still, in the first nine months of 2006, Good Samaritan saw its admissions rise, which Moodys analysts attributed to the halo effect of the acquisition, which was announced in April of that year. Cost controlsincluding a $6 million cut to expenses after the hospital eliminated 130 jobs using early retirements and layoffshelped improve financial performance, as did renegotiated contracts. Good Samaritan boosted MultiCares market share to 50% from about 33%, analysts added.
For the year ended Sept. 30, 2006, Good Samaritan reported net income of $19.3 million on revenue of $210.7 million, up from a $1.2 million loss on revenue of $172 million a year earlier.
John Long, who was MultiCares strategy executive from January 2005 until he became president of Good Samaritan Community Healthcare in October 2006, says integration efforts have exceeded anyones expectations, which he attributed to the organizations similar cultures. Long says Good Samaritans identity as a local hospital remains important, but officials do not hide its MultiCare affiliation, he says. Were out front about the fact, he says.
Consolidation across departments, such as employee education, helped offset vacancies created by Good Samaritans job cuts, he says. Elsewhere the hospital made hires to replace contract or temporary workers that Good Samaritan had relied on to fill chronic vacancies. Seventy nurses from the hospitals registered nurse residency program joined the payroll last year, and officials hope to repeat the success in a coming year, he says. Officials also consolidated the growing systems cardiology, neuroscience, pediatric and physical medicine/ rehabilitation services.
Good Samaritan has yet to adopt MultiCares electronic health-record system, but executives say they are pleased with the speed of integration. The surprise was how fast its all moving, says George Brown, MultiCares chief operating officer.