Six Tips for Running an Effective Hospital
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By Laura Dyrda | December 14, 2011
Here are six secrets to running an effective hospital .
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1. Make sure your records don’t accumulate unwanted depreciation. If a piece of equipment or other asset is no longer in use, or in existence, it should be physically disposed of and removed from the books. For instance, if the hospital once owned a building and it wasn’t remove from the records when it was replaced or sold, the hospital may have paid several years worth of insurance on the old building. In addition to placing a strain on the hospital’s finances, this carries accumulated depreciation on the hospital balance sheet making it appear older than it really is. “Having fully depreciated assets, such as old MRIs, on the books make hospitals seem like they are dated and worn,” says Adam Lynch of Principle Valuation. “You have to clean them out.”
For one client, Principle Valuation identified $31 million in disposals to remove from the books, and almost all of it was fully depreciated. When the disposals are removed, the hospital’s books more accurately reflected their real situation. “Taking care of the books puts you in the best light,” says Mr. Lynch.
The amount of expensed and accumulated depreciation effects a hospital’s financial statements. For audit purposes it is important that processes and procedures are in place to maintain an accurate asset record. In addition, when hospital or health system executives are seeking debt financing, financial intermediaries, capital sources and rating agencies scrutinize the financial statements impacting the cost of capital and possibly access to capital.
2. Minimize staff turnover. Best practices across the board say that high staff turnover is bad for business because it takes time and energy to train employees, and losing their expertise is a drain on hospital resources, says Alex Rintoul, CEO of Medical Center of Elizabeth Place in Dayton, Ohio. There are several reasons why a surgical hospital might have high turnover rates, including low employee satisfaction and higher wages at competing facilities. To meet these challenges head-on, hospital CEOs must have a sophisticated HR professional who is able to work with employees and executives to keep the turnover rate low.
The HR professional from MedHQ that visits Mr. Rintoul’s hospital every week is able to deal with these types of issues because he doesn’t have to deal with the day-to-day payroll and benefits issues. “I had my services increased out of MedHQ’s central office so that I could contract with MedHQ to have the seasoned HR professional that I couldn’t afford every day to visit once per week and handle the challenging HR issues,” says Mr. Rintoul. “As my needs changed and new problems developed, MedHQ worked with me to solve my immediate problems and then looked at how to plan going forward to meet potential new HR complications.”
3. Develop a strong managed care team. Failure to develop and utilize a well-managed care team is one of the most damaging practices when it comes to OR efficiency, says Steven M. Gottlieb, MD, CEO of TeamHealth Anesthesia. If a surgical team is delayed from starting their next case because the anesthesiologist is still finishing up one patient or the next patient isn’t ready for surgery, it creates an unnecessary roadblock that derails the surgical schedule and can leave both surgeons and patients dissatisfied. The concept of care team should also be extended to include a strategic partnership with OR leadership and care providers. For example, the anesthesia team can often partner with the OR circulating nurses to streamline throughput and reduce redundant activities. A care team approach allows anesthesiologists and OR clinicians to coordinate patient care to optimize OR time.
4. Take control over the elements of competition that you can influence. There are certain competitive strategies that the hospital can’t influence — including geography, demographics and payor competition — but they can influence the relationship between the hospital, payors and area physicians. Many times, this includes a physician-hospital alignment strategy. The hospital can also explore alignment with other tertiary providers in the community to provide a seamless continuum of care. All of this requires access to information across the continuum, says Luke Peterson, a National Director of Kurt Salmon’s Healthcare Strategy Group.
Additionally, hospital executives can influence how they develop the different departments. Many departments are modernized when the hospital partners with surgeons to perform new procedures, purchases new technology and updates data collection capabilities. “Timely access to the right information is key, but don’t forget to have the right human resources assets in place and the right people in leadership positions to focus on advancing care and improving the department’s culture,” says Mr. Peterson.
5. Conduct department evaluations before lay offs. One of the biggest mistakes hospitals can make when cutting jobs is establishing a fixed percentage cut in each department, according to Sherilynn Quist, workforce efficiency practice leader at management and consulting company Quorum Health Resources. This tactic may exacerbate staffing issues by eliminating positions in departments that are understaffed, which may jeopardize quality and patient safety. “It never works,” Ms. Quist says. “You’ll end up right back [where you started].” Instead, she suggests using benchmarks and thorough evaluations of departments to identify areas where cuts would have the least negative impact or have a positive impact. “Understand what departments [you] can go after without affecting clinical quality or patient satisfaction,” Ms. Quist says.
6. Consider partnering with a BPO. When deciding on a Business Process Outsourcer, it’s important to understand the strength of each company’s balance sheet and compare their performance to others in the industry, according to a report from National Patient Account Services. A good BPO should focus on healthcare, have early-out services and use state-of-the-art technology to serve you.