From the President: Size and Focus
Richard L. Clarke, DHA, FHFMA
Healthcare provider organizations are beginning to see the benefits of size.
As noted in the cover story of this month's hfm, "Achieving Scale, Strategies for Sustained Competitive Performance," organizations with more than $2 billion in revenue typically perform better related to key financial indicators than smaller organizations. Authors Mark E. Grube, Ryan S. Gish, and Sasha N. Tkach note this better performance has been achieved despite the larger organizations having payer and case mixes similar to those of smaller organizations. According to the authors, size matters.
And size brings with it opportunities to fulfill the mission of a caring organization, such as leveraging technology and talent for high-quality care and funding unprofitable initiatives to benefit the community.
Also in this issue of hfm is an interview I did with noted business author and consultant Tom Peters. (By the way, Peters will be presenting at HFMA's ANI: The Healthcare Finance Conference on June 26 in Las Vegas.) During the interview, Peters advocated an incremental approach to quality improvement. He suggested that financial success, or sustained growth, can be accomplished only by ensuring that patient care is delivered in a high-quality and safe manner. He noted, "CFOs ought to be spending 99.7 percent of their time on making the hospital better"-working to continually improve the core business of care delivery. So while size may matter in terms of access to capital, leveraging cost efficiencies, and capital investment, what counts is high-quality and safe care provided at the unit level, regardless of size.
Healthcare organizations continue to increase in size and complexity-the trend is noted in HFMA's Healthcare Finance Outlook 2008-2013. Physician integration, retail joint ventures, and capital finance techniques are key and important activities for sustained growth. But while healthcare leaders seek opportunities for growth, it is critical that they not focus solely on merger strategies or business transactions at the expense of the fundamental "blocking and tackling" of care improvements. As Peters notes, many significant improvements are not as a result of major investments in electronic solutions (though these investments are important); rather, they are a result of a focus on incremental steps of improvement in care. And for hospitals that do have successful growth strategies, the benefits should be applied to improving the quality of care and other elements of the organization's mission.
Size matters, but quality is what's important.
Publication Date: Thursday, May 01, 2008