There are many “tried and true” volume growth strategies for hospitals:
- Recruit more or different physicians to medical staff to expand local capacity to serve more patients or add a medical specialty to provide a local service option.
- Add new diagnostic services or advanced clinical technologies – historically imaging technology investments, but also surgery robotics and other clinical tools.
- Open a new service – wound care, sleep lab, labor and delivery, renal care or other clinical service line.
- Remodel and refresh the facility physical plant.
- Offer Senior and Women’s service affiliation programs – social, awareness, screenings, service activities.
- Acquire physician practices to assure loyalty and referral discipline.
- Medical office building investments to facilitate referral discipline, physician convenience and hospital alignment.
- Open or acquire emergent, urgent, and outpatient service satellite locations to expand geographic service reach.
Each tactic seeks to increase capacity (assuming there is unmet demand!), encourage more sophisticated testing or procedure use, offer new services (again assuming demand), enhance facility reputation, encourage or capture physician loyalty, increase market size.
Often these decisions are founded on experience, intuition or emulation of others’ success. The common denominator in every case is that they are all investments. Their success in a given institution is likely to be driven by environmental factors that may be overlooked in the drive to improve revenues:
- Are physician services already satisfying local consumption?
- Is there sustained demand for a contemplated service addition? Clinical capability investment?
- Is a physician loyalty investment defensive (hold on to what is already in place) or can it be accretive to revenue and utilization? Will the return justify the investment?
- What is the medical staff and community perception of hospital service and quality?
- What is the composition of currently served patients (demographics, location, payment source)? Who uses the facility today and, more importantly, who does not? Why not?
- What volume of medical service does the local population consume? How much is provided locally? Where do other services come from? Why?
- How supportive are hospital staff and, particularly, nurses of the facility? Employees are all hospital ambassadors, after all.
Systemic barriers intrinsic to current hospital operations must be addressed if any growth investments are to succeed. Address fundamentals: housekeeping, general cleanliness, mechanical and structural maintenance, food service. Improve execution and workflows: timely therapy, lab, imaging, medication and other clinical services; well-structured and delivered admission and discharge practices (these are very often a source of patient frustration at any hospital!). Utilize metrics to demonstrate commitment to operational excellence, foster recognition of improvement, build pride in all staff as members of a healthcare organization committed to great service. Constructively challenge negativity wherever encountered to build a positive, confident, committed atmosphere from every department. Engage everyone in a continuous, data driven practice to reduce waste and improve operating efficiency. Educate staff on the costs of operation and capital requirements. Progress in each of these aspects of operations will build an organization capable of realizing the potential of an investment in growth.
Really understand your market. Acquire data about all of the market, not just the portion historically served. What does data say about real demand for medical services? Where is unserved (by you) demand going today? Why? Are you excluded from a network? Do big city hospitals serve much of your community? Or are patients going to the next community hospital down the road? What is the “buzz” about the hospital at social functions? Incremental growth of existing patient bases may be safe, but significant opportunities (and challenges) may be missed.
Build a product that the community is proud of and confident to use. Be clear about what you can do and what you do to enable access for services that cannot be performed locally. Offer services that are clearly needed, will be utilized and earn patient and medical staff trust while doing so. Earn the opportunity to provide services. A sound operational foundation for successful growth investments must be in place or great ideas will fail.
Contact BrightWork Advisory, LLC today to support your strategic planning.