LAS VEGAS – One expert at the Healthcare Financial Management Association's ANI conference in Las Vegas this week said getting back to financial basics will help a hospital weather the changes ahead.
In a Tuesday session on how community health systems can ensure the affordability of their hospitals' strategies, Jason Sussman, CPA and a partner at Kaufman, Hall and Associates, said, "there is a lot of doom and gloom out there on healthcare reform. We don't know 90 percent of the answers."
"Current industry stresses require rigorous, comprehensive financial planning," he said. "There can't be any more shooting from the hip. Hospitals will need real, analytical work just like they'd look for in a Fortune 500 company."
Now more than ever, Sussman said, one has to have a management team that understands hospital finance not only instinctively but analytically.
The economic environment was squeezing hospitals even before healthcare reform, Sussman said. Hospitals face a long list of issues, including bond covenants, investment losses, pension funding, access to capital, growth fund strategies, physician shortages, reimbursement issues and competition.
"The market was already moving to increase the pressure for more intense, more analytically-based decisions to meet all of these requirements," he said.
According to Sussman, the nitty gritty of the healthcare reform law will play out over the next seven years, with no way of knowing the results in advance. "For every page of law, you can expect 200 pages of regulations," he said. "What we think we know today will be changed tomorrow."
When the some 200,000 pages of regulations anticipated on healthcare reform are issued, "some things will get more stringent and some will fade away into oblivion," Sussman said.
"The given is going to be less reimbursement," he said. "There's not going to be any more revenue than we see today."
According to Sussman, hospitals' survival is going to take a new focus and new competencies in hospital management. Key areas to focus on will include care coordination capability, physician integration and a service distribution system.
Along with the new areas of focus, traditional focus areas such as cost management, capital capacity and scale will be key, Sussman said.
"I would have told you this 10 years ago. It hasn't changed," he said. "Despite the new focus areas, the traditional building blocks will determine the ability to address all the new areas."
In the end, hospitals will need to figure out a way to level or build revenue. It might be through market share growth, he said. Hospitals should take advantage of the time period before healthcare reform fully kicks in to begin to work on revenue-building plans now..
An additional word of advice: test scenarios analytically, Sussman said. "You need to have a process in place that says, 'as we learn more about healthcare reform, we need to be able to understand at a moment's notice how this will affect us quantitatively so we can react more quickly.'"
