Hospitals/Health systems across the country are faced with increasing financial pressure including slow economic recovery, decreases in reimbursement, increases in uninsured or underinsured leading to increased bad debt write offs, and increased operating expenses.
Not surprisingly the result is more and more organizations that were financially sound find themselves either in financial distress or at least moving financially in the “wrong direction.” Turning around a hospital where finances are in decline requires extremely strong leadership from the top, ideally a CEO with prior experience leading a turnaround. This initiative needs to be supported by the hospital senior leadership team and board, and reinforced by engaged employees, physicians, and even members of the communities served by the organization.
Hospital turnarounds are not just about cutting costs. You can’t cut your way to long-term growth and profitability. You need to build programs that will financially support the hospital and meet the community’s needs through physician recruitment and capital investment. Cutting costs are a short term sometimes necessary endeavor, but long term success will only come from program volume and revenue growth.
It’s now essential in the current evolving environment to negotiate favorable contracts with insurers and other networks who control patient access and also consider the development of Accountable Care Organizations and other population health strategies. Finally developing key affiliations and networks with other hospital and healthcare providers are essential to strengthen your gaps in services and geographic coverage.
While no two turnaround situations are ever the same, just as no two sick patients are ever exactly the same, there are some common elements that all successful turnaround situations will have.
These elements includes the following:
- A strong visionary CEO with proven experience in leading a successful turnaround.
- A strong committed board that will support the CEO and put what is good for the long term survival of the hospital ahead of long-standing personal friendships and relationships and agendas and the short term pain and changes that may have to occur.
- A good comprehensive and realistic turnaround action plan based on an in-depth assessment of the hospitals financial, operational, cost structure, market position and also physician and community perception and support. The plan should identify specific goals and objectives and actionable plans with quantifiable metrics and assignment of ownership.
Implementing the turnaround plan:
- Implement plan with sense of urgency.
- Monitor results and modify tactics where necessary.
- CEO stays engaged / leads from “the front.”
- Divides resources/removes obstacles/drive changes forward.
- CEO and leadership team “walks the walk” and “talks the talk.”
- Communication — CEO establishes robust communication process so that employees & physicians are kept fully informed of changes occurring and why they need to occur and to gain their support for the long term benefit to the organization.
- Publicize and celebrate the successes. Nothing breeds success, like success.
Going through a “turnaround” situation is one of the most stressful events for any healthcare organization to go through. With great visionary leadership and a good “plan” the organization will emerge not only more financially sound but with a “high performance” culture ready to move on new challenges.