Moody's: The 5 Most Prominent Areas of Focus in High-Performing Hospitals

Non-profit hospitals currently face the challenge of doing more with less — providing high-quality care with lower reimbursement rates per unit of service — but there are five strategies organizations can focus on to become high-performing, according to a report from Moody's Investors Service.

1. New payment models.
Non-profit hospitals must redesign their delivery of care to achieve lower costs, and new payment models have slid to the forefront. Accountable care organizations and bundled payments are keys to healthcare reform, but other strategies include transitioning certain services to outpatient from inpatient, closing unprofitable service lines and condensing all aspects of a patient's continuum of care.

2. Physician alignment. Similar to the 1990s when physicians sought out hospital employment, non-profit hospitals are re-engaging in physician alignment strategies. However, hospitals and physicians are pursuing different strategies compared with 20 years ago. "Hospital leaders are executing employment contracts with clear productivity standards and, in most cases, no longer paying for goodwill."

3. Growth strategies. Many hospitals and health systems are looking to gain efficiencies and balance capital needs within the merger and acquisition market. For example, some faith-based organizations are looking to consolidate with secular hospitals, while others are looking for geographic market expansion and placement of ambulatory centers. Executives at high-performing hospitals are also increasing scale and monitoring annual revenue growth to establish a solid credit line.

4. Balance sheet growth.
Moody's analysts said most of their rated hospitals are looking to build balance sheet reserves as a key transition strategy. Revenue cycle management, more conservative capital spending models, restructuring debt portfolios, finding different liquidity sources for variable-rate debt and re-evaluating the affordability of defined benefit pension plans are included in those strategies.

5. Improving governance and management skills. Hospitals are increasing the skill set within their management and board ranks by adding individuals familiar with the manufacturing, engineering and technology industries, and some hospitals and health systems are also growing physician leadership programs to bridge trust between hospital management and the larger physician staff.

More Articles on Moody's Investors Service Reports:

58 Statistics on FY 2011 Median Hospital Financial Metrics

Moody's: Low Non-Profit Hospital Growth Due to Flat Volumes, Payor Pressures

Moody's: Rhode Island Bill on Hospital Acquisitions Could Help Community Hospitals

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