The Top Challenge Facing Hospital CEOs

In today’s healthcare industry, hospital CEOs face numerous challenges that can disrupt the balance between providing patients with exceptional quality of care and maintaining financial solvency for the organization.  In a recent survey by the American College of Healthcare Executives (ACHE), they presented the top challenges cited by community hospital CEOs.  For the tenth consecutive year, financial concerns was number one on the list.  While hospital operating expenses increase, reimbursements and volume of patients continue to decrease.  Managing and overcoming financial concerns while providing communities with the services they want and quality they need proves to be the most challenging for CEOs.

CEOs have their work cut out for them as overhead costs continue to rise while margins shrink.  Not only do prescription costs continue to skyrocket, but other hospital supplies and services are creeping up in cost also.  While this is happening, CEOs must also contend with the caregiver shortages and related effects on salaries.  With physician and nurse shortages, organizations are now competing to attract and retain the best and most experienced caregivers.  This often results in higher salaries.  These factors increase hospital overhead, while at the same time they are facing decreasing insurance reimbursements, increased usage of Value-Based Payment models, and regulatory penalties related to quality.

Temporary cost cutting is not a long term strategy to meet financial concerns for the CEO of today’s hospitals.  Because the financial concerns are so varied, it is important for healthcare executives to be laser focused on what will give them the most impact on their organization in the shortest amount of time.  Two major strategies they are focusing on to accomplish their goals are top-line growth and getting lean.

Focus on Top Line Growth

Industry leaders predict that expenses will soon outweigh revenue unless big changes are made.  To meet financial goals, hospital CEOs must evaluate existing service lines and find ways to add value while delivering necessary healthcare services in their community.  As the industry moves toward outpatient preventative care, many leaders are adjusting their future growth plans to be outside the hospital walls to become better prepared to meet regulatory demands and the healthcare consumer needs.  Thinking outside the box and planning ahead will better position organizations to ensure that community needs and revenue are aligned. 

Get Lean & Reduce Waste

One strategy CEOs are using to get lean is to couple innovative technology with their approach to improve and automate processes related to patient quality, experience, and clinical outcomes.  For CEOs to best determine the health of their organization, they need visibility to the key performance data that will help them drive changes.  Busy CEOs do not have time to learn complex or multiple technologies to pull data from.  Utilizing one technology that can manage numerous workflows will do the heavy lifting for them.

In addition, getting lean also means reducing standard hospital waste, which happens to be one of the biggest drivers of hospital costs.  The National Academy of Medicine estimated that the U.S. health care system wastes $765 billion a year, which adds up to more than the annual Defense Department budget.¹  Removing the cost of unused supplies and medications reduces the overhead and creates more of a margin for these savvy CEOs.  Leading a hospital in healthcare today isn’t easy, but CEOs can make impactful and long-lasting changes that will align their financial goals while proudly providing superior quality of care for their patients. 

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References:

¹https://mnnurses.org/medical-waste-rising-cost-healthcare/