Serving Harris, Galveston, Brazoria and Fort Bend Counties
HOUSTON
September Issue 2014
Inside This Issue
COMMUNITY HOSPITALS FACE STRATEGIC CHALLENGES By Wyatt Jenkins Managing Financial Analyst BKD Partner
Baylor College of Medicine Accepts ALS ice Bucket Challenge See pg. 17
INDEX Legal Health..................pg.3 Mental Health...............pg.4 Healthy Heart................pg.5 The Framework..............pg.6 Marketing Essentials.......pg.7
Study predicts hepatitis C will become a rare disease in 22 years See pg. 18
Community hospitals long have been important pillars in towns across the country, providing trusted health care services and often ranking as one of the largest employers in their respective communities. In addition, they are engaged in numerous activities critical to quality of life in so many small communities—providing community rooms for civic meetings and activities, supporting health educational functions and charitable events and providing free or low-cost school physicals and emergency services at school athletic events and community functions. However, health care as we know it is quickly changing, and due to a broad convergence of factors, many community hospitals—and the communities they serve—are at risk.
are unable to negotiate at the level of their larger competitors for the highest payor rates, best capital costs and structures or lowest vendor prices. In addition, tightening market share and developing narrow networks are making health systems and hospitals more adversarial, straining even long-standing alliances and putting the survival of many community hospitals in doubt.
In this challenging environment, community hospitals and their boards are faced with myriad difficult, strategic Although the Patient Protection choices. The questions many should be & Affordable Care Act (ACA) may asking include: have accelerated some industry trends, reimbursement rates likely would have ∙∙ Are we prepared for a critical continued to decline and costs for transition from volume to advanced IT capabilities, clinician talent value-based care? attraction and compliance likely would ∙∙ Should we invest in new models have continued to increase regardless of care and new services out of of the ACA. Compounding these reserves? challenges, community hospitals often ∙∙ S ho u ld we el i m i n at e unprofitable services that are community-backed and desired? ∙∙ Should we acquire local physician practices?
services at the expense of inpatient services? ∙∙ Should we continue to provide inpatient care? ∙∙ Should we pursue an affiliation? ∙∙ Should we stay independent? Unfortunately, there are few easy answers to these difficult questions. However, the broader challenges facing community hospitals and their boards do not have easy, off-the-shelf solutions. With few easy solutions available, it’s imperative for many community hospital boards to undertake an assessment of the strategic position of their hospitals. The strategic readiness assessment is not the same as assembling a multiyear strategic plan or conducting an annual board retreat. This assessment should more heavily focus on near-term survival and success based on the environmental and organizational challenges facing community hospitals.
∙∙ Should we renovate or replace our outdated facility?
Based on the needs of the board and the hospital, a strategic assessment can take on numerous forms. Some boards may pursue an internal process, leaning heavily on a strong administrative team, while other boards may decide to supplement their administrative team
∙∙ Should we pursue outpatient
see Strategic Challenges page 20
∙∙ Should we redesign our physician compensation strategy?
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