3 Strategic Considerations for Hospitals and Health Systems

As an industry, healthcare is undergoing some major changes that have put pressure on hospitals and health systems, regardless of size or location.

In a May 23 webinar hosted by Becker's Hospital Review, Scott Becker, JD, CPA, publisher of Becker's Hospital Review and partner with McGuireWoods in Chicago, discussed several strategy issues and other trends happening in healthcare today.

Mr. Becker discussed some general issues hospitals are facing, such as the erosion of pure fee-for-service medicine. "[There's] more disruption in healthcare at this time than in any time in the last 10 years," he said. "What we're seeing in a lot of systems is slight erosion in profit as opposed to the doomsday scenarios people have expected." However, Mr. Becker also noted that tepid economic growth combined with increased taxes and the 2 percent sequester cut is "not a good sign for any of us."

General issues aside, Mr. Becker focused on three major strategies during the webinar that hospitals and health systems should spend time on, considering the current state of the healthcare industry.

1. Physician alignment. Hospitals and health systems may need to adjust or simply fine-tune their physician alignment strategies to remain competitive, especially considering the looming physician shortage. Mr. Becker pointed out one strategy in particular that is picking up steam. "Clearly right now the dominant strategy is moving toward employment," he said. Employment gives organizations legal flexibility and more flexibility to form an integrated care system.

If hospitals do go the employment route, Mr. Becker stressed that the payment must be in the "range of fair." "It has to be in a spot where the physician doesn't feel disrespected each day," he says.

Even though physician employment has been dominating the industry, Mr. Becker added that many other alignment strategies are still being pursued by many organizations, including co-management agreements, joint ventures, gain sharing and medical directorships, among others.

2. Sustainability. While the general trend in healthcare has been consolidation, many hospitals wish to remain independent. Mr. Becker shared three core questions independent hospitals can ask themselves in order to discern if they can remain independent:

•    Can it be the go-to hospital in the area?
•    Can it position itself so that payors cannot go around the hospital?
•    Can it afford the investments it takes to position itself in such a way?

3. Accountable care organizations. ACOs are still fairly new in healthcare and most hospitals and health systems have not been eager to join the movement. "In terms of ACOs, the jury is still sort of out on how effectively they will operate and what percentage of the patient population will be served by them and how they'll be implemented," Mr. Becker says.

A few health systems and physician groups have gotten ahead of the pack and are moving rapidly away from ACOs and pay-for-performance arrangements, but that is not the case for the majority of hospitals and health systems. "I think many systems have their foot in the door and have to be constantly in very close discussion with payors about new emerging models of pay, but concerned to take the jump other than in incremental pieces," Mr. Becker says.

View or download the webinar by clicking here (wmv). We suggest you download the video to your computer before viewing to ensure better quality. If you have problems viewing the video, which is in Windows Media Video format, you can use a program like VLC media player, free for download by clicking here.

Download a copy of the presentation by clicking here (pdf).

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