Written by: Namar Al-Ganas and Robert Wagner, MD
Over the last six and a half years, many new and innovative strategies for delivering healthcare have surfaced, especially with the introduction of the Affordable Care Act of 2010 signed into law by President Obama. Transitioning from volume to value in healthcare reimbursement is well underway with the introduction of bundled payments for Comprehensive Care for Joint Replacements (CJR) on April 1, 2016, and soon, a bundle in cardiology.
In the midst of these radical and important changes to the U.S. healthcare system, this becomes a great opportunity to excel at the basics of healthcare management to better respond to the turbulence that change often brings. This includes but isn’t limited to market positioning, margin awareness, revenue cycle essentials, effective recruiting, and tackling fear.
Market positioning can simply be defined by how your organization is viewed by patients (or customers) in the marketplace. There is a subtle point here, “viewed by patients”; meaning it matters less what senior leadership thinks is the position of the organization. While it is important for senior leadership to understand how they want to be positioned in the marketplace and take action to achieve this, the reality of a market position is determined by the perception of the patients.
So how do you gauge this perception and know what steps to take to be closer in alignment with the intention of leadership? A thorough market assessment by your strategy department or third party can help uncover the reality and identify actionable steps to achieve the desired market position of your organization.
Once market positioning is defined, it is key to review exactly how your organization earns revenue and turns a profit. In other words, being aware of what drives a positive profit margin is key for defining marketing efforts and what your organization decides to “double down” on.
For example, selling more and doing more in the mostly volume-based current environment isn’t always good for the organization’s profits, especially if the service has a negative contribution margin. In other words, are you fully aware of the costs associated with performing a service that you think is the key to healthy financial performance?
The process of turning a patient service into revenue is becoming even more complex with the move to value-based purchasing. Optimizing revenue cycle functions would help position a healthcare organization to better respond to the changes in future reimbursement policies.
A few key functions worth assessing include patient access, pre-authorization, coding, billing processes, and payment posting. Are the resources needed to perform this work being used efficiently? A cost-to-collect analysis is a way to help gauge the performance of the people and processes within your revenue cycle.
In the world of human resources, we have all heard the phrase: “people are our most important assets”. So do we really know how to attract and retain these most important assets?
Research has repeatedly shown that “A players” look for an employer that offers an environment with the best people, challenges, opportunities, growth (professional and personal), and compensation – in that order. As Jack Welch once said, “The one thing that hasn’t changed is the team that fields the best players, wins.”
With the right people on board, healthcare leaders will be positioned to double down on winning strategies and slash the ones that are not good for the organization or the patient. Additionally, having the right people on board enables organizations to “agitate in order to improve. “ Many leaders fall short of hitting their goals, not because of external market factors or poor internal processes, but because their team may be too afraid to “rock the boat.”
A great book that fully addresses this leadership challenge is called A Failure of Nerve by Edwin Friedman, where the author provides strategies and solutions for being a proactive leader who does not fall victim to anxiety or “paralysis by analysis.”
The challenges of integrating value-based policies into business processes will occupy the minds of healthcare leaders now and in the future. However, finding the opportunity to get “back to basics” of healthcare management can provide a stable foundation for surviving and potentially thriving in an uncertain future environment.
