Prediction and Recommendations for Hospital CEO's

Words used to describe 2020 ranged from unprecedented to apocalyptic, to the more recently invented “omnishambles.” While no one is anxious to repeat 2020, the risk of doing so is strong if we don’t examine the year and consider it as an opportunity to learn, plan and change. As Winston Churchill once said, “Never let a good crisis go to waste.”, 2020 has forever reshaped healthcare organizations. Let’s bring forward the lessons from 2020, to more effectively plan for success in ’21. 

PREDICTIONS: 

1. Telehealth is here to stay. What took root during the pandemic is potentially becoming a lasting, viable solution. Organizations that integrate virtual care seamlessly into their care delivery models are likely to fare better than their competitors. Provider organizations become like “omni-channel retailers,” delivering care when, where and how it’s needed. 
2. Provider M&A activity will rise. Whether driven by predatory or opportunistic players, expect to see more activity in this area. Yet we estimate more than 50% of these mergers or acquisitions will fail to yield the long term anticipated value. 
3. Increase in Private Equity (PE) interest in healthcare organizations. While the pandemic exposed providers’ shortcomings, it has also brought to attention to the opportunities for “optimization or transformation” – exactly the kind of waste PE companies thrive on fixing. Watch for more investments in the provider space. 
4. Increase in domestic manufacturing. In the near-to-midterm, domestic manufacturing will continue to increase, beginning with PPE and like moving to other categories. While this may help address reliability and safety, providers should be ready to pay more to access this option. 
5. Group Purchasing Organization (GPO) consolidation will increase. National GPOs will consolidate and acquire small, regional GPOs or GPOs owned by IDNs. Case in point, the recent acquisition of Intalere by Vizient and GNYHA by Premier. 
6. More surgeries will move to outpatient settings. We’re already seeing this in knee and hip replacements, and expect more redirection to lower cost settings in ’21. 
7. The talent shortage will escalate. More than 52% of the current supply chain leaders are expected to reach retirement age in the next 3-4 years. With the lack of investment in scalable and integrated systems, most of the industry’s knowledgebase will walk out the door, along with crucial supplier relationships. 

RECOMMENDATIONS: 

1. Consider Revenue & Cost as two inseparable faces of a single coin. To build a holistic view and proactively manage operations, Revenue & Cost must be integrated into a single entity. Bring together historically separate stakeholders, and provide the same information so collectively, they can act from the single core set of data. This is how we’ll overcome data asymmetry. 

2. Treat the whole: Cost, Quality and Outcomes (CQO). Just as physicians believe in treating the human body as a whole, CQO should be treated as such. As long as cost, quality, outcomes are not simultaneously optimized, they will continue to have lopsided results. 

3. Move beyond ERP and EHR/EMR systems as the “holy grail.” These systems have deployed at enormous cost, yet result in varying degrees of success and band-aids at every turn. Both are designed to optimize process flow versus providing insights and recommendations for actions. Resist the temptation to adopt yet another, similar ERP; instead create a cloud-based “decision support system” that consolidates various sources of data to provide specific recommendations. 

4. Model new behavior. Physician behavior is more likely to be influenced by evidence-based analysis and recommendations. This requires investments in data foundations, machine learning and AI that may or may not have immediate ROI, but supports long-term business health. 

5. Create the right (aligned) incentives for the organization. Currently, various stakeholder groups, i.e. management, clinicians, revenue management, supply chain and operations, have unique sets of KPIs and incentives. Often these are conflicting in nature and in turn, each will optimize for itself, looking at the others with a bit of suspicion. While it may seem difficult to begin, provider organizations must create a common framework for success.

We wish everyone a very healthy, happy and successful 2021.

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