Hospitals Entrenched in ‘Resource Maximization’ Era

Posted on December 23, 2010


Whether formal federal healthcare legislation or the evolution of a far more competitive economic environment, hospitals will need to change their businesses to survive. Even hospitals currently healthy enough to continue business-as-usual will reexamine the status quo to react to competitors who have retooled and, in the process, become more formidable competition.

Hospitals will need to change, regardless of legislation, to smartly apply their limited resources. This means lowering readmissions. I like Geisinger CEO, Glenn Steele’s position on this one:  ‘if we didn’t get it right the first time, you shouldn’t have to pay for it the second time around.’ This is where healthcare differs from car repair. My mechanic can charge me twice because he is not licensed and I pay him by the hour. Doctors have a license and patients pay for outcomes based on professional judgement. Not all readmissions are provider-driven, but patient education is also a smart allocation of resources.

Another smart use of resources is to make sure all construction projects are needed. I make a living off healthcare projects and would love to do your next one, but as I have mentioned in the past, building should be a fairly desperate, last resort activity. There are so many cheaper ways to get what a hospital needs:  renovate, revamp care delivery processes, lease space, share / trade between facilities or other healthcare systems, or rent equipment prior to building a building.  It makes too much sense to first make sure all scheduling is tight and action steps are minimized to address complexity, time and cost.

Even smarter still is to help prevent the problem. All hospitals need patients, but hospitals want the right kind of patients—and the kind that drain the system of resources are not helpful to anyone.  Clay Christensen covers the effects of lifestyle decisions very well in his book. Preventing obesity, hypertension, heart disease and diabetes are the beginning of system change for the better.

Another way prevention is executed is the concept of bringing the care to the people, or go where the people are. This means health fairs at work for screenings, flu shots, and retail healthcare coming to malls, supermarkets, airports and office towers near you. In this way people will find it harder to avoid the doctor and be more proactive about health choices.

Sadly, like the vacant fronts in strip malls remind us, not every hospital will survive—and that is ok. Consolidation is ripe in healthcare. This means mergers, acquisitions, larger systems, more standardization and hopefully lower costs. Expect a shake out that will stregthen the market long term.

No matter, the hospitals that will survive and thrive will use their resources smartly.