Hospitalist Business Drivers

The Hospitalist. 2006 March;2006(03):

March 1, 2006 | The Hospitalist

Where the (Aging) Consumer Is King

Consumerism is another business driver that hospitals can’t ignore. Individuals are increasingly willing to push their physicians to send them to the hospitals the consumers prefer, according to Solucient, a healthcare market intelligence firm in Evanston, Ill. In a survey of nearly 20,000 households Solucient identified a group of “responsive consumers,” (i.e., those proactive about managing their healthcare). Slightly older than the average consumer surveyed, the respondents have between 20% and 80% higher incidence of chronic diseases, and increasingly choose where they’re hospitalized rather than accept their physician’s recommendation:

Solucient’s data also show that responsive consumers heavily research and utilize hospital and physician ratings.

Homegrown Effort

While consultants are oracles of healthcare trends, some physician administrators rely on themselves instead. Akram Boutrous, MD, executive vice-president and CMO of South Nassau Community Hospital (Oceanside, N.Y.), turned the hospital around with an eight-year business improvement program based on understanding business trends. Some achievements: a 73% increase in patient revenues, 57% jump in outpatient services, and 27% increase in inpatient discharges.

Dr. Boutros considered using consultants, but disliked their high fees and lack of ongoing involvement. Instead he read stacks of books and articles on business drivers and strategies before selecting General Electric’s Accelerated Action Approach to Success. The method uses teams to solve problems that make organizations non-competitive.

“Hospitals face incredibly complex problems and competing demands from different departments,” says Dr. Boutros. “As a physician administrator I felt I could translate for all sides.”

He cites consumer-directed care as a key trend blindsiding most doctors. “They are completely unprepared for the changing market dynamics of consumer choice,” he says.

Consultants, administrators, and physicians agree: Hospitalists need to avoid the tunnel vision when it comes to their own metrics and pay attention to the business drivers changing healthcare. If they learn to spot key trends, they’re perfectly situated to work with hospital administrators and their office-based colleagues on using that knowledge to increase market share, and to have better and more profitable hospitals. TH

Writer Marlene Piturro covered SHM’s Leadership Conference in Vail for The Hospitalist.

Trend Spotters

Consultants who claim the inside track on what’s driving the business of healthcare are probably more plentiful than ED cases during a full moon. However, some companies do provide valuable market intelligence, keeping physicians abreast of trends shaping their industry. Excerpts from the Sg2 (a Skokie, Ill., consultancy) November 2005 newsletter, for example, flagged these key hospital trends:

Hospitals experienced sluggish inpatient volume for the first three quarters of 2005;
Spine procedures will experience an18% volume growth in inpatient procedures, representing an attractive profit area;
Year-over-year construction cost growth—typically in the 1.5% to 3% range—shot up 15% in 2004. Hospital construction cost escalation of 12% to 15% is predicted for 2006;
Wal-Mart now has 15 low-cost, no-appointment primary care clinics with more planned. Could they soon have 3,000 such clinics in operation? What if Wal-Mart partners with a health plan as a less costly way to handle routine cases that might otherwise end up in the ED?
The General Motors Corp.-United Auto Workers pact marks the end of first-dollar health benefits as an employee right. Hourly workers [at GM] now pay $2,000 per year for health insurance, and for the first time retirees will pay premiums, deductibles and drug copays; and
Hospitals seek a broader role in delivering services in their communities with low-cost basic services clinics. As construction costs escalate, relocating services can help hospitals improve return on investment.

How can hospitalists ride the trend, say, of sluggish inpatient volume? According to Sg2 chairman Michael Sachs, “In a hospital running at full capacity, a good hospitalist helps manage patients more efficiently so they can go home sooner and the hospital reduces length of stay, making room for new patients. In that way, a hospitalist expands inpatient capacity without anyone laying a brick. If a hospital is not running at full capacity, the efficiencies and LOS of a good hospitalist program makes each admission more profitable.”