1. Make sure your records don’t accumulate unwanted depreciation. If a piece of equipment or other asset is no longer in use, or in existence, it should be physically disposed of and removed from the books. For instance, if the hospital once owned a building and it wasn’t remove from the records when it was replaced or sold, the hospital may have paid several years worth of insurance on the old building. In addition to placing a strain on the hospital’s finances, this carries accumulated depreciation on the hospital balance sheet making it appear older than it really is. “Having fully depreciated assets, such as old MRIs, on the books make hospitals seem like they are dated and worn,” says Adam Lynch of Principle Valuation. “You have to clean them out.”
For one client, Principle Valuation identified $31 million in disposals to remove from the books, and almost all of it was fully depreciated. When the disposals are removed, the hospital’s books more accurately reflected their real situation. “Taking care of the books puts you in the best light,” says Mr. Lynch.
The amount of expensed and accumulated depreciation effects a hospital’s financial statements. For audit purposes it is important that processes and procedures are in place to maintain an accurate asset record. In addition, when hospital or health system executives are seeking debt financing, financial intermediaries, capital sources and rating agencies scrutinize the financial statements impacting the cost of capital and possibly access to capital.
2. Develop a strong managed care team. Failure to develop and utilize a well-managed care team is one of the most damaging practices when it comes to OR efficiency, says Steven M. Gottlieb, MD, CEO of TeamHealth Anesthesia. If a surgical team is delayed from starting their next case because the anesthesiologist is still finishing up one patient or the next patient isn’t ready for surgery, it creates an unnecessary roadblock that derails the surgical schedule and can leave both surgeons and patients dissatisfied. The concept of care team should also be extended to include a strategic partnership with OR leadership and care providers. For example, the anesthesia team can often partner with the OR circulating nurses to streamline throughput and reduce redundant activities. A care team approach allows anesthesiologists and OR clinicians to coordinate patient care to optimize OR time.
3. Consider joint or full management over employment for physicians. Clinical co-management and professional service agreements can allow closer partnerships without the legal ramifications of employment. Trusted physician partners can manage a service line or even the entire hospital. “This improves quality, operations and program development because these metrics are stressed in the initial agreement and the physicians are a part of that discussion,” says Kate Lovrien, a strategist with Kurt Salmon’s Healthcare Strategy Group. “The agreements usually include a base fee (a fixed, monthly payment), and an incentive fee, which varies based on whether or not the desired outcomes are achieved.”
You can also invest in business ventures with physicians. These joint ventures take the form of legal partnerships designed to share risk or expertise around specific healthcare functions or services, such as ambulatory surgery. “An organization can benefit from physicians’ expertise in these new areas, and may find innovation more attractive if the risk is shared with another party,” Ms. Lovrien says.
4. Consider partnering with a BPO. When deciding on a Business Process Outsourcer, it’s important to understand the strength of each company’s balance sheet and compare their performance to others in the industry, according to a report from National Patient Account Services. A good BPO should focus on healthcare, have early-out services and use state-of-the-art technology to serve you.
Related Articles on Hospital Management:
Accountable Care: The Top 5 Things the Community Hospitals Can Do Now
Physician-Hospital Alignment: 4 Strategies to Align Physicians
Crafting a Strong Primary Care Model
