2015 Challenge for Hospitals – How to Simplify and Stay Relevant

The mindset of many hospitals over the last several decades has been to be everything to everyone. There was a desire to create a complex organization offering many different services. The challenge with this organizational philosophy is multi-fold, especially for rural hospitals that find themselves funding specialty services that are low in demand, sometimes at the expense of serving more pressing needs of their community.

Hospitals might want to take a page from the Proctor & Gamble playbook that changed from offering many different products in many different sectors to a simplified offering of their most profitable and targeted product lines. You can read more about it here in an interesting post on the story and its lessons for hospitals.

In short, Proctor & Gamble decided that its financial picture would be better if it got back to being relevant to its core market and reduced the breadth of its product lines. That’s a great strategy for most hospitals, especially considering the level of complexity that must be managed before any health care services are factored in. 

What is a hospital, anyway?

When you think about it, hospital CEOs are running an economic enterprise that is unlike nearly any other entity.

Hospitals need to be a….

  • Hotel to accommodate patients that spend the night
  • Restaurant to provide meals to patients
  • Housekeeping provider to take care of their restaurant and hotel
  • Technology manager of very complex equipment
  • Real estate manager of physician buildings, clinics, and other outposts
  • Grant writing expert to seek funding
  • Billing expert to manage complex financials with Medicare, Medicaid, and private payers
  • Collection agency

All of this baseline complexity must be managed before factoring in any clinical/professional health care delivery.
The path to simplifying and staying relevant
Getting on the right side of new payment models and staying relevant to patients starts with the same thing – examining strategically what you are trying to accomplish for the community you serve. What are the true demographic needs of the patients you serve? If there are only 12 heart surgeries a year in your area, then is there ROI in investing in that infrastructure? Would your community be better served in investing in managed care for rampant diabetes or other chronic illnesses that are revealed in your community health care needs assessment?
Hospitals need to find out what the demand is in their area and offer services to meet that demand in a way that sets them apart and brings recognition for success. Providing the best quality and access to treat in-demand care makes patient sense and financial sense. Patients that require care from low-demand specialties can be referred to larger institutions, with YOUR institution focusing on providing high quality follow-up care.  Appropriate care in the appropriate setting is where delivery models are headed.
New health care delivery models
As we move from volume based compensation to patient-outcome based compensation models, becoming focused and strategic about which services to deliver lays a foundation for success. Simplifying health care services infrastructure based on patient population demand helps to make difficult decisions on which services to keep and which to eliminate.


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