IRVING, TX – Hospitals and health systems will face increased demands from the government and patients this year, forcing them to do more with less, according to experts.

According to VHA, Inc., an Irving, Texas-based national network of not-for-profit healthcare organizations, healthcare executives must use a new mindset in the coming year. They will need to be more proactive in their management style and able to identify potential issues in their organizations.

To survive – and possibly thrive – in 2010, healthcare executives will need to improve collaboration in their own organizations, VHA experts said.

VHA's industry-specific predictions for 2010 include advice on Medicare's Recovery Audit Contractor (RAC) program. RACs are expected to createl organizational, financial and manpower challenges for hospitals, requiring them to organize early response plans.

"If hospitals thought RAC was tortuous before, they may be surprised by how much more complex it will be in the future," said Ginny Balla, a clinical performance director at VHA.

Executives should choose a RAC chairperson to help accelerate the hospital's audit response time. In addition, hospitals need to appoint a physician advisor to help verify a hospital's claims. To improve preparedness, VHA experts recommend having a clinical documentation improvement program to keep track of what RAC auditors are reviewing.

There is some good news in the VHA report. Experts expect capital spending pressure to ease in early 2010, which should allow hospitals to fund new purchases and replace equipment.

Unlike spending for supplies, delaying or deferring new capital purchases doesn't eliminate the need to replace equipment. New technologies will force hospitals to upgrade, VHA experts said.

"Hospitals need to stop looking at equipment in the same vein as supplies and understand that in today's environment the difference between equipment and technology is narrowing," said Nik Fincher, vice president of purchased services sales and capital at VHA. "They should look at and manage equipment and technology in the context of being a part of the sum of total assets and the return their investment will have from clinical, operational and financial perspectives."

Healthcare organizations will also need greater business intelligence, according to VHA.

"The pressure to cut costs is growing exponentially, with or without healthcare reform," said Guillermo Ramos, senior director of supply chain analytics at VHA. "On average, hospital systems unnecessarily spend $4 million annually in excess costs for supplies due to the lack of business intelligence within their supply chains."

The importance of solid business intelligence and the demand for powerful analytics tools will grow in healthcare over the next few years to feed the need to increase revenue, reduce costs and comply with industry regulations and standards, VHA experts said.