5 Ways to Grow Outpatient Volume

Hospitals and healthcare companies can grow volume and profits by focusing on outpatient services. However, this important area of hospital profit is under increasing attack from new and old competitors, insurance companies and physician-owned services.

Outpatient services are more of a "retail" type of business, responding to the same principles as other retail businesses: customer service, reliability, ease of use and efficiency. Customers want a fast, easy, reliable experience. Hospitals that respond to this can take business away from competitors that don't focus on these principles.

Traditionally, hospitals have been organized around inpatient acute services. In the future, growing outpatient services will take on increased importance — and require a different, more service-oriented business model. Here are five ideas that will help you grow your hospital's outpatient volume and increase the quality of patient care.

1. The most important factor in growing outpatient business is to engage the customer and solve their problems. According to Roger Johnson, a principal at Ivy Ventures "The most important customers of outpatient services are still physicians, but our customers also include office schedulers, patients and insurance companies. Listen to what these customers are saying about your service. Customers often experience many problems with the delivery of outpatient services. If you can solve those problems, you will deliver better patient care and your organization will see volumes grow."

Engage your customers more than you have in the past. Look at your service from the customer's perspective. Customer engagement is the key to growing your outpatient business. It is important to be close enough to customers to be able to understand their problems. Engaging customers means talking to them. Find out what they want, and then give them what they want. Be willing to make changes in your product delivery to satisfy the customer. Treat each customer as an individual. The days of "one size fits all" are over. People today expect a more individualized experience. (As evidence of this, consider the tens of thousands of apps now available for customizing one's smartphone or tablet.) Don't tell customers how you do it; ask them how they'd like it done. This is a subtle, but profound, difference that will pay dividends.

Take a retail approach to growing your outpatient business. It's not uncommon for a busy specialty practice to schedule 50 or more procedures per day. As a hospital CEO, you should know who is making and influencing the outpatient referral decisions in your market. You should then visit these influencers on a routine basis. Find out what they think of your service. Change and improve your service, based on their needs and what your customers want. And don't be afraid to ask for their business: "What will it take to get more of your outpatient referrals?" Listening to your customers and refining your services to better meet their needs almost always results in better patient care.

2. Obtain usable and current market intelligence. This means having good information on your market. Use this market intelligence to write a plan to gain market share. This intelligence should include:

•    How big is the market?
•    Who are your competitors?
•    What services do they provide?
•    How good is their service?
•    What market share does your organization now enjoy?
•    Who controls the purchasing decisions for this market? (You may want to learn the names of the five to 10 groups who control the largest volume of patients.)
•    What share do we now have of the business that originates with these groups?
•    What are the three to five things that our organization can do to get more business from each of these groups?
•    Is there a market for new customers and products?

You'll also need information about problems your customers may be having, so you can begin to solve those problems. According to Mr. Johnson, "We've noted that hospital executives often have little understanding of the issues physicians experience with their hospitals' outpatient services." For many hospitals, this is an opportunity for improvement — and for growth. As for competitor intelligence, you don’t have to be perfect, you just have to be better than the competition.

Work on growing outpatient volume every day, by talking to your customers and solving their problems.

3. Put an effective, innovative entrepreneur in charge of outpatient services. A good leader is more important than a good business plan. Put a good person in charge of outpatient services, and good things will happen. If you put an ineffective leader in charge, there is no limit to the damage that can be caused. Put your most effective executive in charge of this competitive service.

John Mitchell, CEO of Delta County Memorial Hospital in Grand Junction, Colo., notes, "I find it effective for managers to set annual goals and 90-day plans to support a hospital operations plan. Visiting referring physicians' offices to talk to the doctors and their office manager is a very effective way to increase referrals – especially in competitive markets. Having this good relationship also has the added benefit of reducing denials for medical necessity and improper orders."

4. Provide the best customer service and be convenient for your customers.
Your services should be easy to use, high quality and delivered in a friendly, professional manner. Parking, scheduling, ease of customer use and fast accurate reporting to the customer are all very important. Set the highest standards for customer service and convenience in your market. Be the market leader.

Here's a common, but unfortunate scenario that plays out at many hospitals today. A patient is anxiously waiting for a medical test result. She is unsure of when the test result is expected, and reluctant to bother the physician. Time and again, the test has been misplaced or overlooked in the avalanche of paperwork and other test results. The patient wants to know the test result. Physicians want to know the test results, so they can move ahead with additional tests or treatment for the patient. None of these customers want to wait; all need information as soon as possible. You will need fast and accurate test results in order to provide great patient care and to be successful. Be the best in your market.

There is some hope that the implementation of electronic health records will improve the reporting of results. But keep in mind that whenever a new system is put in place, many physicians experience problems in receiving results. Healthcare executives should focus on how the information system is working for the physicians and the patients. Make sure that your information systems are serving the customer.

5. Develop real-time reports on volumes, opportunities and problems.
Use this reporting every day to improve your outpatient service to your customers. Legendary management consultant Peter Drucker liked to say, "What gets measured gets done." Set stretch goals, establish mileposts and hold people accountable. We like reports that look at what happened during the last week or month, and what will happen during the next period. The reports should identify three or four things for each physician that can increase volume to your outpatient facilities. Set stretch goals, monitor results and hold people accountable.

"Hospitals can really help themselves by adopting a service oriented-approach to outpatient services. Look for small gains in volume. Adding four advanced diagnostics tests a day can result in a $1,000,000 gain in profit," says Bob Oldfield, principal at Ivy Ventures, LLC.

Growing outpatient services will take customer engagement, good information, effective leadership, great customer service and convenience, and accountability reporting. These five things will help you grow your outpatient services.

J. Stephen Lindsey, FACHE, was CEO at HCA Henrico Doctors’ Hospital for 16 years. He has served as an affiliate professor in the MHA program at Virginia Commonwealth University. Mr. Lindsey is a principal of Ivy Ventures, LLC, a consulting firm that helps hospitals grow outpatient service lines. He is a fellow of the American College of Healthcare Executives. He can be reached at: slindsey@ivyventures.com.

Douglas D. Wetmore, IV, is one of the founding partners of Ivy Ventures, LLC. Prior to founding Ivy, he was vice president and general counsel of MMR Holdings, Inc. He has also served on the staff of Stewart & Smith, a Washington, D.C., boutique that advises institutional investors on legal and regulatory issues, and worked for international law firms as an Antitrust and Trade Regulation associate. He can be reached at: dwetmore@ivyventures.com

More Articles on Hospital & Health System Management:

10 Technologies to Keep Hospitals Competitive
12 Challenges and Opportunities for Hospitals in 2012
11 Evolving Issues in Healthcare and Business

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