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Healthcare Leadership White Paper

Healthcare Trends – 2011

Healthcare Leadership White Paper Healthcare Trends – 2011 By Doug Smith, MBA, MHA and Christine Ricci,
Healthcare Leadership White Paper Healthcare Trends – 2011 By Doug Smith, MBA, MHA and Christine Ricci,

By Doug Smith, MBA, MHA and Christine Ricci, RN, MBA

B. E. Smith’s annual survey of more than 200 health- care executives provides insight into
B. E. Smith’s annual survey of more than 200 health-
care executives provides insight into issues industry
leaders expect to face in the coming year. The results
of the most recent survey conducted in October 2010
revealed a common theme: a rapidly changing health-
care landscape is creating a level of uncertainty that will
make skilled leadership more critical than ever before.
and increasing regulatory and reporting demands, all
of which are occurring at a lightning-fast pace.
Although change in healthcare is constant, the accel-
erated rate at which it is currently happening is
unprecedented in history. Healthcare organizations
will need to be more nimble than ever to keep up with
technological advances, aggressive healthcare reform
One survey respondent said it best: “Organizations
that cannot adapt to change quickly will find them-
selves on the outside looking in. This includes access,
safety, finance and information technology.” All of
these issues underscore the importance of having
seasoned executive leaders in place to guide health-
care organizations into an uncertain future.
Following are the top trends cited by healthcare
leaders as the industry prepares for 2011.
877.802.4593 | www.BESmith.com

Healthcare Trends – 2011

Healthcare Trends – 2011 Designing and delivering a superior customer experience every step of the way
Healthcare Trends – 2011 Designing and delivering a superior customer experience every step of the way
Healthcare Trends – 2011 Designing and delivering a superior customer experience every step of the way

Designing and delivering a superior customer experience every step of the way is more critical than ever.

Political landscape

Up to 34 million people will gain access to insur- ance coverage as the new healthcare reform legislation begins to take effect, adding to growing service demand created by an aging population — especially in the emergency room. At the same time, the legislation cuts $155 billion in Medicare hospital payments, which will further squeeze organizations already operating on tight budgets. 1 As a result, cost management is a primary concern.

Keeping costs down An article in the October 11 edition of Modern Healthcare revealed that 80 percent of hospital leaders surveyed by the American College of Healthcare Executives (ACHE) reported that reducing operating costs would be a leading priority in the next 12 months. 2 Instituting cost manage- ment initiatives while complying with regulatory demands was repeatedly cited by survey respon- dents as a concern for 2011.

Operational excellence, with cost constraints The impact of healthcare reform has yet to be fully felt, leaving many organizations hesitant to make immediate changes. Some aren’t filling open leader- ship positions, for fear that the skill set they recruit now, may no longer be relevant in six months. At the same time, political change is creating a high demand for operational excellence. Skilled senior leaders who can successfully manage the entire operational picture, including clinical and quality concerns, regulatory demands, financial performance and healthcare reform, will be crucial. Additionally, the need for effective revenue cycle management means skilled case managers will be in demand as hospitals learn to do more with less.

Many organizations are beginning to address these challenges with interim leaders who have the flexibility and depth of experience to help them adapt quickly.

Economic Landscape

Capital access is more restrictive than it used to be.

Shrinking reimbursements, lower endowments and the difficulty of acquiring a loan in today’s stagnant economy all contribute to this problem. Health- care organizations lacking strong profitability and substantial cash reserves will find it harder to secure funding for expanding services that support demand.

To compensate, survey respondents are focusing on capturing additional market share as a means of gaining revenue. A key component of a successful market strategy is to build awareness of core competencies and key differentiators, while embracing innovative loyalty programs that make your organization the one of choice. In order to do this, healthcare organizations have to focus on sepa- rating themselves in the marketplace.

Building your brand Consider ways to strengthen your organization’s brand within the community. The following actions

will help define your brand position and strategy:

• Revisit your market position, key strengths and challenges to determine the differentiating attributes that define your brand.

• Survey customers and prospects to get a more accurate perspective on how they view your organization.

• Raise visibility of your organization with strong community involvement.

• Develop a solid “brand promise” that serves as the foundation of your marketing messages.

• Choose the right tactics to grow your brand. What worked yesterday may not be relevant today.

Become the sought-after provider Designing and delivering a superior customer experience every step of the way — and developing a means to make that experience repeatable — is more critical than ever, particularly in high-volume areas. This fosters positive “word-of-mouth” marketing, which is key to a successful strategy. Those offering the best physicians, outstanding care and a positive customer experience every time will cultivate “brand advocates” among their customers,

1 Biden announces deal with hospitals to cut Medicare, Medicaid payments by $155 billion, the Commonwealth Fund, July 8, 2009.

2 Jessica Zigmond, “In wake of reform…” Modern Healthcare, October 11, 2010; pp. 10-11.

Healthcare Trends – 2011

Healthcare Trends – 2011 who will spread the good word throughout the community. The result is
Healthcare Trends – 2011 who will spread the good word throughout the community. The result is
Healthcare Trends – 2011 who will spread the good word throughout the community. The result is

who will spread the good word throughout the community. The result is that those organizations will be top-of-mind when people experience a health problem and need care.

Effective leadership

Demand is increasing for skilled senior leaders, but supply is dwindling. According to the ACHE survey, CEO turnover jumped from 14 percent in 2008 to 18 percent in 2009 3 — the highest rate since 1999. This is an alarming trend, since CEO loss filters throughout the organization.

For years, analysts have predicted a mass exodus of C-suite executives as the baby boomers begin to retire. It was initially estimated this exodus would occur over a 10-year period, but many experts are now expecting it to happen more quickly.

Increased pressure on leaders Senior leaders are dealing with higher volumes, lower reimbursements, pressure to improve outcomes, and an aggressive focus on cost manage- ment — all compounded by the fast rate of change within the industry. These conditions place

What can you expect in 2011?

Below are selected comments made by participants in B. E. Smith’s October 2010 survey of more than 200 leading healthcare executives.

“Healthcare leaders are adopting manufacturing processes like Lean and Six Sigma that will help quality, if not applied in a cookie- cutter fashion. Each organization has its own culture and requires differences in approach. So much depends on strong leadership.”

“Healthcare will need to focus on improving quality care, measured by satisfaction scores, CORE measures and “never” events. These quality measures will culminate in pay-for-performance. Leaders who can improve these measures while reducing costs will be in high demand.”

“Obtaining capital is more difficult, while the economy depresses donor fundraising. Organizations aren’t prepared for pay-for- performance, and there’s a disconnect with physician incentives and alignment. However, quality is becoming a primary concern, and increased competition is raising leadership abilities at organizations. I expect to see a renewed focus on strategic planning.”

considerable stress on the leadership team. Not surprisingly, some survey respondents report they may retire sooner than originally planned.

A number of these executives will pursue interim

leadership as a more flexible career alternative. In fact, 85 percent of those surveyed said they were considering an interim career. As a result, healthcare organizations will have increased access to skilled interim leaders to address immediate challenges.

Succession planning Developing young talent to step into leadership roles will become critical as senior leaders retire. Coaching programs in which an experienced execu- tive coach works side-by-side with participants in their everyday environment can help administrative teams hardwire leadership skills in top performers.

A changing leadership team New leadership roles are emerging at many health- care organizations. Survey respondents identified

a need for strong case management leadership and

quality directors, as well as physician administra-

tors who can effectively lead through the complexity

of integrating physician groups into hospitals.

With the new government mandates for advanced technology, many organizations are putting a chief medical information officer — ideally, a physician who understands technology implementation — at the C-suite table.

To succeed, integrate

With healthcare reform shifting the landscape from pay-for-procedure to pay-for-performance, a large percentage of survey participants cited integration as a critical success factor for 2011.

Synchronize key relationships Rapid change in the industry is forcing strong collaboration and transparency among all involved entities, including physicians, clinicians and the financial department. In order for everyone to be profitable and for the patient to receive ideal quality care, all of these groups must be closely aligned. When integrating physician groups into the

3 Hospital CEO Turnover, American College of Healthcare Executives, March 2010.

Healthcare Trends – 2011

Healthcare Trends – 2011 hospital, it can be challenging to ensure alignment of organiza- tional culture
Healthcare Trends – 2011 hospital, it can be challenging to ensure alignment of organiza- tional culture
Healthcare Trends – 2011 hospital, it can be challenging to ensure alignment of organiza- tional culture

hospital, it can be challenging to ensure alignment of organiza- tional culture and values, but it’s critical to success.

System integration Another factor impacting integration is technology. The right technology can simplify the integration process, delivering a patient-centric focus that enables effective management of the entire continuum. With care increasingly expanding into the home environment, integration across the entire service continuum will be crucial to ensure consistency and quality.

Organizations who integrate successfully will enjoy optimal clinical, financial and patient satisfaction outcomes, including improved performance, better cost management, higher reim- bursement and stronger accountability.

Technology advances

For many survey respondents, new technology represents a blessing and a curse.

Advantages and disadvantages When correctly implemented, technology improves patient safety by reducing medical errors and adverse drug side effects. It provides easy access to medical records, helping physicians and clinicians deliver consistent, quality treatment and plan for the patient’s future healthcare needs.

Concerns expressed included training staff to use technology properly, so it doesn’t become an obstacle to productivity and good quality care. Survey respondents also observed that technology can negatively alter patient satisfaction when it’s perceived that clinical staff is spending more time behind computers than providing hands-on care.

Financial challenges The cost to implement new technology is an increasing burden for healthcare leaders. One example is the government-mandated Electronic Health Record (EHR) program. With federal stimulus dollars and stiff penalties tied to the ability to implement EHR by 2015, healthcare organizations are under tremendous pressure to implement the system before the penalty phase begins.

An additional factor mentioned by surveyed executives is building (and paying for) the infrastructure to support the EHR system — particularly smaller community hospitals, who don’t have the resources. For many, the resources required will make it impos- sible to capitalize on federal stimulus funding.

4 steps toward a profitable future

Heading into 2011, many hospitals will be in “survival mode,” with a primary goal of maintaining profitability. As Medicare further tightens criteria for reimbursement, healthcare organiza- tions will need to take several steps to maintain profitability.

1. Decrease readmission rates while improving quality scores. 2. Implement more aggressive cost control than ever before. Align closely with physicians and invent new methods to drive out costs. 3. Provide incentives to top performers, especially physicians. 4. Identify creative ways to invest in infrastructure.

The solution rests within the leadership team. Even in the face of great uncertainty, healthcare organizations with seasoned executives — those with a proven history of containing costs and sustaining profitability while delivering high quality — will continue to thrive.

About B. E. Smith

B. E. Smith is a full-service leadership solutions firm for health- care providers. B. E. Smith’s comprehensive suite of services includes Interim Leadership, Permanent Executive Placements, and Consulting Solutions. The company is comprised of veteran healthcare leaders who partner with each client to create a solu- tion that uniquely fits their individual needs.

With more than 30 years of experience helping healthcare organizations address a wide range of financial, clinical and operational challenges, B. E. Smith has the expertise to quickly address the multitude of complex variables that become real trends in the healthcare industry.

For more information, visit www.BESmith.com or call 877-802-4593.

© 2011 B. E. Smith

Doug Smith, MBA, MHA, has served as president and chief execu- tive officer at B. E. Smith since 1996. As a seasoned professional with more than 30 years of experience in healthcare search and recruitment, Mr. Smith provided leadership to B. E. Smith during a period in which the firm grew from two consultants to a staff of over 200. Under Smith’s leadership, B. E. Smith has become the only company in the healthcare industry that is a leader in both Executive Search and Interim Leadership services. Doug Smith holds a master’s degree in business administra- tion, as well as a master’s degree in hospital administration.

Christine Ricci, RN, MBA, is vice president of marketing and stra- tegic alliances at B. E. Smith. Ms. Ricci is recognized for her ability to effectively lead, communicate and drive results across organizations. Her successful track record includes building and directing organizations to achieve increased profits, cost reduction and expanded market share. Christine holds a bachelor of science degree in nursing and a master’s degree in business administration.

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