Hospital margins remain tight and while they’re growing, around 37% of hospitals are still losing money, according to Kaufman Hall.
The persistent financial challenges have sparked a variety of initiatives in the last few years to find cost savings and efficiencies while eliminating waste and adding revenue streams. Health systems have been playing defense, reacting to economic challenges, inflation, staffing shortages and new regulations in real time. For some health systems, that has meant workforce reductions, cutting services, severing ties with insurers and consolidation.
Now, it’s time to play offense.
“The biggest lesson I’ve learned in the past year is that financial strength and strategic growth start with empathy and open-minded leadership,” said Sham Firdausi, CFO of ScionHealth – Watertown Regional in Louisville, Ky. “Playing defense isn’t sustainable and cost-cutting alone won’t secure our future. Instead, we’ve focused on thoughtful investments that improve patient care, support our workforce and drive long-term stability.”
ScionHealth is leveraging technology to ease staff burdens and restructuring service lines to meet the needs of their community instead of emphasizing cuts. Mr. Firdausi said every decision his team makes must have clinical and financial value. He engages physicians and frontline staff as well as financial leaders in decision-making to forge strategic alignment and move from strategy to execution.
“It’s easy to focus on numbers, but real success comes from understanding the people behind them,” said Mr. Firdausi. “The leaders who balance financial discipline with compassion will be the ones who drive lasting impact.”
Michele Volpe, COO of the Philadelphia-based University of Pennsylvania Health System, is taking a similar approach to the next few years, transitioning to an offensive strategy.
“In light of the significant financial challenges facing healthcare systems, growing and or expense cutting will not fully get us to our goal,” she told Becker’s. “As leaders, we have to reimagine how we do our work.”
Over the last year, University of Pennsylvania Health System has set goals for expense reduction and achieved them, but also experienced full emergency departments, limited bed capacity, and staff burnout. Now with possible Medicaid cuts and other federal policy changes, Ms. Volpe sees a need to provide healthcare services differently.
“Those organizations that will be most successful going forward will look very different from how they look today,” she said.
