Managing clinical, financial integration is key to hospital success

In order to survive in the ever-changing healthcare marketplace while saddled with new healthcare reform mandates, hospitals around the country must optimize three fundamental components of care delivery: clinical/operational integration, financial integration, and shared infrastructure and governance.

Steven Berkowitz, president of SMB Health Consulting in Austin, Texas, conveyed this message to hospital executives last week at the 2013 Small or Rural Hospital Conference in Newry, Maine.

[See also: Healthcare leaders discuss reducing hospital readmissions ]

During his presentation, Berkowitz highlighted the three imperatives for effective clinical integration at hospitals: embracing data transparency, implementing evidence-based practices, and excelling at pay for performance.

With value-based purchasing on the horizon, healthcare consumers will increasingly become better informed and will make healthcare decisions on the basis of value, Berkowitz said. This makes both price and quality of care transparency extremely important for hospitals going forward.

“That which is measured tends to improve. That which is measured publicly, tends to improve faster,” he said. "Transparency is the best thing that’s happened to quality since antibiotics – by decreasing variance and improving results. As transparency matures, it will rewrite the book on determining who your competitor is.”

Berkowitz said that at least 5-10 percent of total Medicare reimbursements for hospitals are at risk going forward. As a result, it’s crucial for hospitals to excel at pay for performance.

[See also: Rural hospitals struggle with physician recruitment, but can focus on improved quality scores]

“Ask your leadership team: is your goal 100 percent? You can’t have anything short of 100 percent on these core measures,” he said. “Just one infection is too many.”

In regard to financial integration, Berkowitz stressed that “there will be a focus on cost control like we have never seen before in our careers. Unless we change our models, it’s a pay cut for somebody in healthcare.”

Berkowitz said the greatest opportunity for hospitals to cut costs would come from reduced overall utilization of the healthcare system. It’s critical that organizations think about “what we can do in the community to prevent many healthcare issues in the first place,” he said.

“The bottom line is hospitals are going to have to start thinking like an insurance company,” he added.

When it comes to shared infrastructure and governance among hospitals, there are many structural variations for organizations to think about –“one size does not fit all,” said Berkowitz.

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