Becker's Hospital Review

Executive Briefing: Hospital & Health System Strategy In these times of industry uncertainty, health systems must be actively working on four major strategies to be positioned for the future. These groupings of strategies include: Growth, Effectiveness, Relevance and Capabilities. The importance of Growth strategies is and will remain strong. Health systems continue to have many opportunities for growing top line revenue that must be aggressively undertaken. Some of these include: • nhancing service lines within existing E programs • dding new service lines entirely (e.g., amA bulatory) • xpanding the market footprint through E alignment, partnership or acquisition • xpanding channels and avenues to deliver E care, such as urgent care or retail care • eploying technology particularly to grow D access with online/smartphone health and telemedicine options Moreover, organizations can approach growth strategies tactfully focusing on areas that are likely to benefit from the industry trends (ambulatory, primary care, technology-enabled solutions) rather than riding the same specialty inpatient service line growth plan too long. Effectiveness strategies Definition: strategies that improve an organization's ability to produce a decided, decisive or desired outcome Effectiveness strategies focus on gaining higher value from the organization and delivery of services. Effectiveness has gained increased focus of many healthcare organizations in the last several years as reimbursement and financial pressures have mounted and market volume growth has stagnated or shrunk. Often, however, this effectiveness focus has been incremental, and not fully integrated into the organization's strategic DNA. A focus on effectiveness strategies is often found in mature industries that have moved past the growth phase. In the manufacturing industry, various waves of effectiveness strat- egies have come in the form of assembly line manufacturing techniques, interchangeable parts and lean manufacturing. An example of this is the automobile industry, which has moved from hand building every car, to Henry Ford's assembly lines, to today's semi-automated robotic assembly facilities. The importance of effectiveness strategies is increasing in healthcare. As market volumes stagnate, competition will shift to price. Price competition will likely come in three forms: • Local competition for ambulatory services at rates 35-50 percent lower than hospitalbased provider rates.12 • ational competition with providers like N the Cleveland Clinic that offer high-quality bundles of heart care for lower costs than local providers to large employers.13 • nternational competition for medical I tourism to high-quality hospitals across the globe. It is already happening in places like Thailand, where services offered at Bumrungrad hospital are performed at the same level as Western care for 30 percent of the price.14 47 • se technology to complete standardized U tasks • einforce goals by addressing organizaR tional culture Approaching effectiveness strategies with an eye toward areas of highest impact now and in the future will cause health systems to look at processes both within the hospitals and outside the hospital walls. Relevance strategies Definition: strategies that improve the ability to provide services that satisfies the needs of the user The relevance of health systems is threatened as non-traditional providers are rapidly moving into the provider business. For example, insurers are outright purchasing large physician organizations,16 portions of the care delivery model,17 and using risk-sharing contracts to directly align with physicians. The anticipated result is cost of care reductions. To date, much of the cost reduction has come at the expense of traditional hospital businesses. In fact, through the narrowing of networks to preferred physician groups, commercial insurers are predicting the ability to reduce costs by as much as We provide innovative longterm strategic advice to hospital and health system leaders. We are strategy consultants. HealthSystemAdvisors.com More effective alternatives will become increasingly attractive to consumers as dollars are squeezed out of the healthcare industry, whether that be patients footing higher levels of their healthcare bills, physicians who have taken on risk-sharing arrangements for a certain population, or employers and insurers. Key methods toward improving effectiveness according to the Commonwealth Fund's "Achieving Efficiency: Lessons from Four Top-Performing Hospitals"15 include: • tandardize processes and supplies S • mprove the coordination of care between I handoffs across departments and elements of the continuum HEALTH SYSTEM ADVISORS

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