The necessity of using technology to give financial relief
Challenges exacerbated by the COVID-19 pandemic will push executives to find ways to use technology to improve efficiency and reduce operational costs.
This article is part of a CEO leadership series
Healthcare organizations face continued financial pressure, and that pressure intensified in the last two years thanks to the unusual demands and strains put on the nation’s delivery system by the COVID-19 pandemic.
The depth of the challenge to providers continues to emerge. For example, hospitals’ and health systems’ median operating margins declined by 11.8 percent in February compared with the previous month and 26.7 percent compared with the previous year, according to an article from the American Hospital Association about a report from Kaufman Hall.
Hospitals are operating at “well below sustainable levels,” the Kaufman Hall report notes. “Recovery from the Omicron surge likely will continue to be slow in the coming months, and hospitals could face additional setbacks if other variants … lead to new surges.”
Financial pressures are weighing on providers’ ability to deal with other challenges, including rising staffing and supply costs, which directly impact the ability of providers to achieve their core missions.
Identifying and managing financial challenges will take a mix of technology, management and leadership that will test CEOs, according to leaders of healthcare information technology and service organizations queried by Health Data Management to assess emerging challenges facing providers and the industry.
The companies spotlighted in the interviews are the highest performing firms in healthcare as recognized by the annual Best of KLAS recognition program, selected by the consultancy because of recognition from customers for their responsiveness to clients, the quality of their products and their knowledge of the industry. These firms, featured in a new series of insights from Health Data Management, Beyond the Rankings, offer a range of products and services, including electronic health records, enterprise resource planning, artificial intelligence, consulting services and more.
The perspectives of these company leaders illustrate how technology can support providers’ evolving healthcare delivery and the key challenges that provider organizations’ CEOs must address.
The staffing shortfall – often addressed through the use of signing bonuses or through expensive temporary nursing – is just one of the expense burdens healthcare organizations are now shouldering. Providers also saw patient volumes shift significantly during the pandemic, with inpatient elective procedures being cancelled for months. And they faced higher labor costs related to the pandemic’s staffing demands.
“We’ve got to reduce the units and the cost per unit.”
Bruce Haupt, president and CEO, ClearBalance
Providers need to take a variety of steps to deal with financial pressures and improve efficiency in their organizations. That means improving care for patients – through initiatives such as population health and use of analytics – as well as increasing efficiency throughout the organization.
“We’ve got to reduce the units and the cost per unit,” advises Bruce Haupt, president and CEO of ClearBalance. Achieving more efficiency and cost savings will be paramount because consumers can now choose from a variety of options for care, including offerings from corporate giants Amazon and Walmart.
“Business models like Amazon or Walmart can provide a number of services at a very low cost,” Haupt suggests. That will increase the pressure on providers to increase efficiency.
“That's probably the biggest thing … trying to figure out, ‘How can I take my operation and deliver the right care – no wasted care – and do it at the lowest cost and create it the greatest ease of accessing it?’ That's the Holy Grail that they have to be working toward.”
Bruce Haupt of ClearBalance on reducing waste (cost) in healthcare
Improving health equity
Even as healthcare organizations are under increased financial pressure, they are facing rising calls for improving health equity from their communities and through pressure from value-based contracts.
Provider organizations, particularly not-for-profits, are encountering rough seas, especially if top executives receive large salaries and their organizations report excess revenue over expenses as the communities they serve experience rising healthcare needs. And healthcare organizations are being called upon to play a greater role in addressing the social determinants of health – non-care delivery factors that influence the health of those in the community.
Increasingly, providers are facing calls to better empower and engage with patients.
“A number of health systems that are starting to see through the eyes of their patients in a better way.”
Adam Gale, CEO, KLAS Research
“There are a number of health systems that are starting to see through the eyes of their patients in a better way,” says Adam Gale, CEO of KLAS Research. Healthcare organizations have “talked a long time about being patient-centric and using technology (and viewing the care process) through a patient's eyes. But I don't think many have gotten to that point.”
Improving health equity also will mean providers need to ensure that patients have access to their own information, says Steve Brewer, president & CEO of Galen Healthcare.
“It's definitely a drive within the industry to make the information accessible to patients," Brewer explains. "It highlights the importance of patients being a crucial member of the care team."
Galen Healthcare Solutions CEO, Steve Brewer with KLAS Research's Adam Gale discussing continued staffing challenges technology's role.
Expanding the scope of care
Incorporating and acting on social determinants of health can help improve care as well as the overall health and well-being of individuals, putting patients at the center of their own care, says Judy Faulkner, CEO of Epic Systems Corp., the nation’s largest provider of health records systems.
The increased emphasis on value-based care and optimizing patients’ health will require a recalibration of how providers function – their responsibility will shift to supporting health and wellness, rather than just caring for people when they get sick, the leaders of health IT firms say.
“Are we fixing what’s broken or are we keeping people healthy? What's healthcare’s role? Is it providing surgeries or is it encouraging patients to work out and go to the gym? There's such a breadth of what healthcare services can be,” says Haupt of ClearBalance.
Answering these questions, and assessing the future directions for carrying out an organization’s mission, will prove essential to improving healthcare delivery and the health of as many people as possible, he adds.
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