July 22, 2009
A new survey from HFMA's Healthcare Financial Pulse project describes the impact of shifting patient volumes on hospitals and health systems and identifies key action steps healthcare organizations are taking in response.
The survey, which was sponsored by McKesson and RelayHealth, finds that while healthcare finance executives anticipate a decrease in inpatient volume, they also expect modest outpatient volume growth. They are responding to these volume changes by adjusting staffing costs, intensifying focus on service line management, and targeting physician alignment strategies.
Inpatient Volume Down, Outpatient Up
While 17 percent of hospitals and health systems anticipate a more than 5 percent decline in inpatient volume, the same percentage of healthcare organizations predict that outpatient volume will increase by more than 5 percent, according to the Pulse survey results. Against an overall anticipated decline in inpatient volume, some hospitals are projecting volume growth in inpatient ICU/CCU and surgical service lines. Respondents project growth across outpatient service lines, including radiology, laboratory, surgical, and home health.
Two-thirds of the survey respondents also anticipate modest growth in net patient revenue over the coming fiscal year, with 14 percent of the respondents predicting net patient revenue growth of over 5 percent.
Emphasize Service Lines, Physician Alignment
The Pulse survey also finds that in response to changing patient volumes, healthcare organizations are emphasizing strategies to control costs and efforts to enhance volume.
A major emphasis on the cost-control side is improvement of existing service lines. Almost three-fourths of respondents are increasing accountability for service line performance, and close to 40 percent are investing in financial training for their service line and department leaders. Hospitals are also seeking to renegotiate contracts with payers and suppliers to help strengthen bottom-line performance, and are ensuring that staffing and related costs are appropriate to volume.
To enhance volume, hospitals and health systems are paying attention to physician alignment strategies. Nearly 60 percent are placing their focus on referring physicians, while almost half are pursuing physician employment strategies. Another major emphasis is on technology, and the possibility of better leveraging clinical and business intelligence for decision support.
Also New: Credit Market Insights and Investment Strategies
A set of new resources on the Healthcare Financial Pulse web site help hospitals navigate today's credit markets and hone their investment strategies.
In "Hospital Strategies for Navigating Today's Credit Markets," David W. Johnson answers questions regarding credit market expectations and the orientation of credit markets today, as well as strategies to improve liquidity, better manage unfunded liabilities, optimize performance reporting, and choose the right financing vehicles.
According to Johnson, managing director and co-head of Ziegler's healthcare investment banking practice in Chicago, it will be prudent for healthcare organizations "to be more conservative in managing investments, strive for higher liquidity, focus on the core business, and prepare for whatever regulatory changes may emerge from Washington."
Investment management is the topic of two additional resources on the Pulse site. GE Asset Management's Dave Wiederecht offers "Three Keys to Investing in Turbulent Times," focusing on liquidity, diversity, and investment wild cards. And Tim Sheehan, managing director with Cain Brothers, provides "Three Tips for Optimal Hospital Portfolio Investing." One piece of advice: Focus on potential worst-case scenarios to reorient your investment decisions toward a more conservative perspective that emphasizes cash preservation.