Survey: Almost 60% of hospital executives say hospitals must transform business models

Almost 60 percent of U.S. hospital executives say their institutions must substantially change their business models in the near term if they are to survive, according to new research sponsored by Prudential Retirement, a business unit of Prudential Financial.

The research report, "Tipping Point: Hospital Resilience in a Perfect Storm," was authored by The Economist Intelligence Unit, the business research arm of The Economist Group.

For the report, the EIU surveyed more than 300 executives at rural, urban and suburban hospitals of all sizes across the nation about trends and challenges affecting the U.S. hospital sector.

Here are five findings from the survey.

1. The shift from fee-based to value-based payments is the single biggest challenge facing U.S. hospitals, survey respondents said.

2. Of those surveyed, 71 percent of hospital executives said that shift posed the most critical challenge, and 61 percent agreed the shift exacerbates pressures on the hospital value proposition. And 58 percent said hospitals must change their business models in order to survive financially. However, only half of the respondents said they were well prepared to address this challenge.

3. According to the EIU research, 60 percent of executives said big data is transforming patient-related opportunities; 57 percent called it a game changer for operational performance; and 63 percent said the value of data that hospitals hold remains largely untapped.

4. Thirty-nine percent of survey respondents said attracting and retaining workforce talent is a critical issue for the hospital sector as a whole. As far as their own hospitals are concerned, 69 percent said strategic talent management will be critical to staying competitive, and 74 percent believe their organization needs to pay more attention to retaining and attracting the best talent.

5. As consumers take on a greater burden of healthcare expenses, they are demanding more transparency in outcomes and the cost of care, according to 63 percent of survey respondents. In fact, changing patient demands about service are the second most likely challenge to be described as "extremely critical" (24 percent) by survey respondents, according to the EIU research.

"The findings of the EIU survey highlight an industry preparing to make substantial changes in the midst of diverse and pressing challenges. In particular, the Affordable Care Act and payers' desire to stem rising costs have necessitated a shift toward value-based payment models, which is unleashing disruption across the industry," the report concludes. "However, this is only one of a range of daunting market, talent, technological and patient-centered pain points. If hospitals fail to respond to these challenges, competitors will emerge, which will further unsettle the healthcare landscape. Established hospitals must act quickly and creatively to identify business models that will enable them to thrive in the new healthcare landscape."


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