Current operational constraints in healthcare have had a negative impact on many health systems’ margins.
Becker’s asked two health system strategic leaders about the operational issues that are creating the greatest drag on their system’s margins today and what they’re doing differently to address it.
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Editor’s note: Responses have been lightly edited for length and clarity.
Question: What operational issue is creating the greatest drag on margin today—and what are you doing differently to address it?
Dawn Thompson, Chief Strategy Officer of Advanced Diagnostics Healthcare System in Houston, sees her system’s margin being impacted by rising labor and supply costs, among other operational constraints.
“Labor typically accounts for 60% of total hospital cost and wage/benefit growth continues to outpace inflation and reimbursement increases, agency staff and turnover due to burnout,” Thompson said.
“Hospital margins today are squeezed by rising labor and supply costs, revenue cycle inefficiencies, payor reimbursement challenges, and operational bottlenecks compounded by social and demographic shifts.”
Dawn sees a balanced approach as the best foot forward for solving the drag on Advanced Diagnostic’s margin.
“Solution: Most effective leaders take a balanced approach that combines technology adoption, workforce optimization, and financial process redesign to protect margins without compromising quality of care,” Thompson said.
Dr. Lisa Ishii, Senior Vice President of Operations at Johns Hopkins Health System and Professor of Otolaryngology-Head and Neck Surgery at Johns Hopkins University in Baltimore, stated that her system’s vacancy rate is affecting their margin.
“Our higher than normal vacancy rate is creating a drag on margin today,” Dr. Ishii said. “With challenges to filling many support service positions we are seeing significantly elevated overtime expenses. To address this, we are partnering with HR on recruitment, retention, and pipeline development and ensuring that we are aligned with the multiple markets that we serve.”
At Becker's 4th Annual CEO + CFO Roundtable, taking place November 2–5 in Chicago, more than 1,500 hospital and health system executives tackle decisions that determine whether organizations thrive or merely survive: protecting margins under cost pressure, choosing where to grow, renegotiating payer relationships, stabilizing the workforce and proving real ROI on technology. This is where leaders work through them together, face-to-face. Apply for complimentary registration now.