By Frank G. Flosman, MBA

 Many healthcare providers are discovering that while they were able to weather the rough economic climate of 2009, 2010 has brought additional financial pressures.  These pressures are likely to continue unabated given public and private outcries for healthcare cost containment. 

In order to meet the challenges of a permanently changed healthcare environment, provider organizations must improve operational efficiencies and structures to address both near-term financial management and long-term service and quality requirements.  Here are the top ten ways to achieve sustained operational improvements in a challenging healthcare environment.

1.  Strategically focus on high-return improvements first.  Identify those cost reduction and efficiency opportunities that are likely to yield the most significant results and then pursue these initiatives in a manner that supports service, quality, and customer satisfaction. 

2.  Balance short-term needs and long-term goals.  Achieving cost improvements simply through across-the-board reductions may limit an organization’s ability to adapt to future service requirements, as well as miss an opportunity to streamline structures and processes.  Cost improvements should be based on achieving efficiencies through aligning processes, service integration, structures, and resource utilization with best practices and the organization’s culture and mission.

3.  Improve organizational knowledge and capabilities to ensure sustainability of operational improvements.  Initial and ongoing communication, education, and training should be integral to any improvement initiative.  A communication plan should be developed at project inception; improvement rationale and objectives should be disseminated to all stakeholders; methods and metrics used to assess and monitor performance should be transparent; and orientation and ongoing training related to improved processes, management metrics and tools, and redesigned roles should be acculturated.

 4.   Use metrics to identify the overall likelihood and scale of operational improvements, followed by the use of best practice knowledge and experience to determine how to achieve required performance levels.  Tools, such as benchmarks, are essential for addressing and achieving operational improvements.  However, achievable performance goals and the specific opportunities related to these targets can only be determined following a comparison of current processes and structures against best practices.  This will result in achieving improvements that meet and exceed the organization’s needs (i.e. “push the envelope”) while considering the facility’s unique operating environment (i.e., improvement should not compromise long-term service requirements).

5.  Draw from multiple best practices and improvement techniques to develop an operational improvement approach that meets specific organizational needs.  Improvement initiatives should apply a variety of best practice methodologies, tools, and philosophies in a manner that considers, respects, and utilizes an organization’s unique operating environment.  This includes an organization’s specific culture, mission, organizational memory, resource availability, competitive landscape, current practices, and stakeholder expectations.  Relying on a single methodology or tool may not allow for the flexibility needed to adapt to the ever-changing healthcare provider landscape.

6.  Develop and institute accountability structures and practices.  Many organizations can identify both the need for improvement and at least the rough scale of likely opportunities.  However, very few organizations have the capabilities and tools to realize and sustain significant operational gains.  Management tools should be implemented, performance metrics established, and accountability structures and expectations should be set.  Most importantly, all these processes and structures should be fully and consistently utilized and fully embraced by leadership.

7.  Gain efficiencies from aligning resources and processes across the care continuum.  Increasingly, hospitals will find that they have limited ability to achieve significant efficiencies by focusing improvement efforts solely on internal processes.  This situation will be exacerbated in the future by likely requirements to better integrate service components across the care continuum. Including clinical integration components in any operational improvement initiative is one of the best ways to address near-term cost and efficiency improvement needs while preparing for probable healthcare payment methodology changes.

8.  Pursue new relationships with referral sources and related service providers that will facilitate successful improvement efforts.  A hospital’s ability to achieve significant operational improvements without addressing issues of stakeholder participation and behavior may be limited, or, more likely, very difficult.  This point is especially important given that the need to improve integration of clinical services may well transition from a major driver of efficiencies and effective utilization of scarce resources to a financial and perhaps even regulatory requirement.  New relationships with referral sources and related service providers will need to be developed and nurtured.

9.  Own the information, process, and outcomes.  Whether or not external assistance for either operational assessments and/or improvement implementations is utilized, hospital management must take full credit and responsibility for both the initiative and its outcomes.  Such accountability will convey the gravity of an organization’s need to improve, as well as give legitimacy to the need for all management staff to take charge and be held to performance standards and outcomes.

10.  Don’t wait.  Delaying operational improvement initiatives will only exacerbate current financial challenges and put an organization further behind the curve in preparing for whatever changes may come.  Hospitals and healthcare systems need to strive to improve operational efficiencies and structures now to address both financial management and service and quality requirements.

For more information on how to improve your hospital’s operations, please contact Frank Flosman at 312.775.1714 or fflosman@thecamdengroup.com.