An HFMA Healthcare Financial Pulse Resource
Has your strategy for communicating with the credit markets kept pace with today’s economic times? Access to low-cost capital may depend on how well your organization is keeping its message on target.
“Financial sustainability is most important,” notes Frederick A. Hessler, managing director of Citi’s Health Care Group. “What credit markets want is to be comfortable that the loans they write are solid. They want to be sure that they are making loans to organizations that are financially sound.”
How can hospitals best provide this assurance? In addition to maintaining transparent communications of financial performance, Hessler recommends focusing on three major themes:
1. Operational improvement
Hospital leaders should highlight top actions and the speed of implementation associated with key initiatives to manage costs and improve quality of care. Driving home this point: In 2007, growth was listed as the top priority for 32 of 35 presenting healthcare organizations at the Annual Non-Profit Health Care Investor Conference, an event hosted by Citi with the American Hospital Association and HFMA in which health systems present operational and financial results to institutional investors, rating agencies, and other representatives. In 2009, the leading issue was operational improvement.
“Healthcare organizations have been surprisingly aggressive in both timeliness and degree about making reductions in the labor force, changes in compensation, cuts in management staff, and suspensions of some employee benefits—all of which are actions to discuss,” notes Hessler. Also key to communicate is the amount of effort devoted to process improvement on the clinical level in such areas as efficiency, outpatient flow, and supply utilization.
Simply put: Credit-worthy organizations understand the need to be aggressive about operational improvement.
2. Alignment for clinical outcome improvement
Also of interest are the actions that today’s healthcare organizations are taking to align with physicians to improve clinical outcomes. “There is a great deal of discussion about initiatives regarding physician alignment, collaboration, employment—almost a renewed sense of the need for shared processes and understanding between physicians and hospitals to better achieve higher-quality outcomes and process improvement,” notes Hessler. The take-away message should be that healthcare organizations need to be focused and aggressive in their initiatives to provide coordinated, high-quality care.
3. Transformation in information use
With a longer view in mind, leadership also should be communicating organizational recognition that the world of healthcare delivery is changing and that operations will need to run differently to facilitate transformation in care. Many pilot projects and government efforts are focusing on hospital-physician integration to transform clinical care processes, whether through “medical homes” or outcomes-based incentives. As such, hospital investments to connect with physicians through health IT are of growing interest.
At the 10th Annual Non-Profit Health Care Investor Conference this past spring, several organizations, such as Boston-based Partners HealthCare, described how they view the connection of all their physicians to their health information system as a fundamental business construct. These organizations are sending a clear message that they plan to be ready for a future that is likely to demand greater integration of information to facilitate high-quality care.