Becker's Hospital Review

41 41 CEO/STRATEGY Market share trumps operational efficiency for teaching hospitals, study finds By Leo Vartorella M any hospital leaders focus their time and energy on optimizing op- erational efficiency, but they may be better served focusing on enhancing their market share as a way to improve financial performance, according to a study published by Taylor & Francis. e study, led by James Langabeer, PhD, of the Houston-based University of Texas Health Science Center, analyzed the financial performance of 80 major teaching hospitals in the 20 largest metropolitan areas in the U.S. from 2012-16. Specialty hospitals were excluded from the study to better control re- sults. Here are four study findings: 1. e median return on investment, which is calculated by dividing net operating mar- gin by total assets, was 4.28 percent across all hospitals. Market share had a mean of 13.67 percent across all hospitals. 2. Market share for the lowest-performing facilities in terms of return on assets was 10.05 percent, though the market share for the highest performing hospitals was 17.8 percent. Overall, "high-performing hospitals had an average 77 percent higher share of their community's gross revenues," wrote Dr. Langabeer. 3. Other than market share, the only variable that influenced financial performance was teaching intensity. "Results suggest that for every one-point change in market share, there was a 0.382 change in ROA, assuming other covariates remained constant. Additionally, for each additional resident, there is a 0.025 reduction in ROA," wrote Dr. Langabeer. 4. "e current study findings suggest that hospitals with a higher market share, higher economic status of their surrounding com- munity and somewhat lower intensity of teaching efforts all help to position teaching hospitals to outperform their competition," said Dr. Langabeer. n HCA, Geisinger CMOs among MedPAC's new members By Leo Vartorella T he Medicare Payment Advisory Commission ap- pointed five new members and reappointed a current member May 29. The members' terms will expire in April 2021. "MedPAC provides valuable insight and advice to Congress on myriad Medicare issues," said Gene Dodaro, U.S. comptroller general. "I was heartened by the number of highly qualified applicants who ex- pressed interest in joining the commission and am pleased to announce these latest appointments." Here are the newly appointed members: Karen DeSalvo, MD, professor at Dell Medical School at the University of Texas at Austin Marjorie Ginsburg, founding executive director at the Center for Healthcare Decisions Jonathan Jaffery, MD, professor at the University of Wisconsin School of Medicine and Public Health in Madison Jonathan Perlin, MD, PhD, president of clinical ser- vices and CMO at Nashville, Tenn.-based HCA Health- care Jaewon Ryu, MD, executive vice president and CMO at Danville, Pa.-based Geisinger n More executives may face timed, standardized tests in job interviews By Leo Vartorella G auging an applicant's preparedness for the rigors of an executive-level position can be difficult, and many firms are turning to standardized competency exams for help, according to The Atlantic. Companies such as Amazon, Ford and UPS use employment testing to screen entry-level applicants and managers, while other companies are using the tests to screen applicants for higher level positions. Timed exams help employers assess problem-solving abilities and other traits that may not be re- flected in resumes. Vista Equity Partners, a private equity firm with more than 280 employees, has long touted its practice of using employee ex- ams to promote based purely on merit. Vista co-founder and CEO Robert Smith, whose estimated net worth is $4.4 billion, regularly lauds the company's testing system for finding future senior-level employees in the mail room. Exams such as the Criteria Cognitive Aptitude Test give partic- ipants 15 minutes to answer 50 questions that measure prob- lem-solving, critical thinking and learning ability. Shane Fred- erick, PhD, a professor at Yale School of Management, said he can predict cognitive reflection based on a select few ques- tions included in exams. "If a bat and ball cost $1.10 total, and the bat costs $1 more than the ball, how much does the ball cost?" is an illuminating question Dr. Frederick uses, according to The Atlantic. n

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