Hospital CEOs express competitive concerns
By Stephen W. Earnhart, MS
President and CEO
Earnhart & Associates
Dallas
Earnhart & Associates had the distinct honor of addressing the Texas Hospital Association annual meeting recently. Senior level management from several hundred hospitals attended, and I couldn’t resist the temptation to poll as many of them as possible. I felt like a reporter for some small-town newspaper, but I was able to obtain feedback on several issues.
Hospital CEOs are concerned about the outflow of outpatient surgery to the competition. They are fearful of competing hospitals establishing programs that will take their surgeons and their cases away from them. Further, they feel the drain of cases from "frustrated" surgeons doing their own facilities or doing cases that have a facility fee attached to it being performed within the walls of the physician’s practice.
Most of them acknowledge that they have procrastinated dealing with developing their own centers outside the walls of their hospitals and are looking for ways to reduce that "brain drain" without jeopardizing bond or tax issues.
Many are fearful of doing something for the surgeons that will now have to be done with radiologists, pathologists, and/or every other service line in the hospital.
Reimbursement is another concern for the administrators. Most are confused about the upcoming changes in outpatient reimbursement and the effect on their institutions. Many said that they have heard that their revenue reductions could be anywhere from a decline of 30% to an increase of 5%. (This reporter had to agree with them. It is very confusing! We were not able to offer any comfort to the masses.)
Finding and retaining experienced nurses — especially PACU nurses — was a major concern. (They used the word "PACU." How cool that they knew that term! They must be discussing this problem in meetings to know that acronym.) Since the nursing shortage is real and significant, I asked what they were doing about it in their institutions.
At this point I could tell that most of them were lost, but they did make valiant efforts to recall staff meetings on the subjects. Some of their thoughts on the matter were:
1. More on-the-job satisfaction. ("Define please," I asked. The responses were vague.)
2. Stronger recruitment activity. ("How?" The responses were vague.)
3. Better benefits. ("Such as?" They weren’t sure.)
At this point, several glanced at their watches, gently reminding me that they were in a hurry.
Removing the pressure point, I pointed out that our own internal survey revealed as many as 200 new ambulatory surgery centers are opening this year alone. I asked, "Could this be contributing to the nursing shortage?" Most thought that trend was playing a major role in their losing their experienced operating room staff.
Another matter CEOs named as a cause for concern is increasing difficulty dealing with reimbursement in general. One of the areas they expanded upon was a greater "take-it-or-leave-it" attitude among some managed care companies. They cited the fact that it is increasingly difficult to negotiate competitive contracts.
Hospitals boost telecommunications
Telemedicine seemed to be a hot topic at the conference — especially in the area of rural locations "telecommunicating" data back to the main hospital to be "overread" by the medical staff. This seemed significant to hospitals that were expanding their base of business into new areas, especially "underserved" areas or in areas where it was not feasible to establish a new hospital but the population was growing.
Along those lines, the idea of "specialty hospitals" such as orthopedics seemed hot. We are dealing with several orthopedic hospitals ourselves, and the trend seems to be gathering momentum even in the traditional hospital setting.
Lastly, it does appear that many of the CEOs we spoke with acknowledge that vertically integrating their business line is going to require outsourcing some traditional hospital business. America is a land of opportunity, and many enterprising individuals are coming out of the hospital to launch their own firms that can provide these services faster, cheaper, and often in a more customer-oriented environment.
Many of the services that revolve around the operation room, such as transcription services, billing, ambulatory surgery, anesthesia, etc., are being served via for-profit companies. Hospitals seem to be aware of this growing trend and are "exploring" opportunities to determine how they can work with the changing service lines.
As long as there is plague and famine, hospitals will be around. However, I suspect that in the not-too-distant future they will morph into something significantly and distinctly different from what we know today.
(Editor’s note: Earnhart and Associates is an ambulatory surgery consulting firm specializing in all aspects of surgery center development and management. Earnhart can be reached at 5905 Tree Shadow Place, Suite 1200, Dallas, TX 75252. E-mail: surgery @onramp.net. Web site: www.earnhart.com.)
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