Scott MacStravic, PhD
The traditional path to protecting not-for-profit tax exemption has been to demonstrate the “community benefit” expenditures, “charity care,” free services, etc. that the hospital has donated each year. There are always arguments about what should be counted, e.g. whether donated care means losses measured against charges, which are typically highly overblown, or against costs. And with growing pressures from all payers, especially Medicare and Medicaid with respect to paying enough to cover costs, hospitals’ ability to spend or lose money in community benefit is increasingly threatened.
There is another purpose for community benefit reports, however--the community relations, reputation and image of the hospital, which is something even for-profit hospitals want to cultivate and maintain. Of course, when the definition of community benefit includes only free care or losses incurred serving the un- or underinsured, this may mean relatively little to the rest of the community. In the tradition of “What’s In It for Me? (the WIIFE challenge in marketing), hospitals might also work on reporting what they have done for the rest.
One common PR approach being used by hospitals is to focus on local businesses, since good relations with employers can promote the hospital’s being included in more provider networks, or otherwise being better supported by employers. And the usual strategy recommended for this is to offer employers ways to protect and promote their workers’ health and productivity.
The trouble with promoting health, of course, is that it tends to reduce the need and demand for sickness care services that hospitals depend on for their livelihood. In spite of this internal conflict, however, hundreds of hospitals are engaged in promoting employee health, with their own workforces, those of local employers, or both. This will normally fit perfectly into their mission statements, and may yield more positive PR than reports of the economic impact that hospitals have (which is based on how much of the community’s resources hospitals spend in delivering care, after all) or its services to the poor.
The most important impact that hospitals’ efforts in employee health can have is easily that of improving the productivity and performance of the workforce. And unlike early employee wellness or disease management programs, when efforts focus on the factors that cause the most impairment in productivity/performance, and can yield the greatest improvement in both, they will not usually be factors that lead to significant sickness care need and use.
In the first place, productivity and performance are impaired or limited by a host of factors unrelated to employee health. Employees’ motivation levels, capabilities/talent levels, and the effects of management policies and support systems on enabling employees to recall the right thing to do at the right time can have far more impact than health factors, for example. [W. Lynch & H. Gardner “Employee Health Problems Are Not the Greatest Threat to Worker Productivity” Health as Human Capital Foundation May 20, 2007 (hhcf.blogspot.com)]
Even when health-related impairment factors are identified, they often involve behaviors and conditions that are not major sources of sickness care revenue for hospitals. These include smoking, which impairs productivity and performance due to frequent smoke breaks away from employees workstation, far more than through long-run risks of lung cancer and other diseases. Sleeping problems, obesity, poor nutrition and physical inactivity, along with a number of emotional/behavioral disorders, such as stress, depressed and anxious feelings, etc. are immediate and significant impairment factors long before they turn into need for sickness care of the kind most hospitals offer.
It would be wise, and may even be essential, for hospitals to master the art and science of productivity/performance management in its fullest context. Otherwise, they may never succeed in carrying out the missions, visions, and values they espouse in light of labor shortages and ungenerous payment. They have the added motivation of wanting to optimize workforce performance in order to maximize their revenue from pay-for-performance systems offered by an increasing percentage of payers.
Hospitals that master productivity/performance management--through comprehensive applications of motivational talent-boosting, and systems support--not merely health management, will be in a strong position to both manage their own costs and promote good relations with local employers. The success they have with employees, through both improving their health and enhancing their wealth, thanks to the compensation, incentives, and career advantages of good health, will even promote generally good consumer relations, at least among employees and their dependents.
At a minimum, hospitals should recognize the limited potential they have to behave as charitable institutions. Engaging in successful productivity and performance improvement relationships with local employers, should also drive totally new and different revenue to hospitals, unhindered by the parsimonious attitudes and practices that payers adopt relative to sickness care. When hospitals can save employers and employees money, improve their financial situations, and quality of life, and for far larger numbers of people than those whose lives are saved through sickness care, they will have a wholly new basis for generating truly profitable revenue, as well.
