Beyond the Bottom Line: A Shift of Mindset to Weather the Storms

I recently attended a conference where presenters shared survey data that was hot off the press. The survey asked health system CEOs about their most significant priorities for 2024. This is an important question because the answer implies the goals, actions, focus, and mindsets of leaders working with those CEOs in those systems.

As I listened, I was hopeful there would be a shift to something new. Perhaps a focus on “bending the cost burden of care by doubling down on upstream care and value while assuming full risk for the wellness of our communities” or “restoring the experience and soul of the healthcare workforce to give us the capacity for greatness.”

However, it was neither of those things.

The number one priority? Increase system revenue.

The number two priority? Diminish costs.

In fact, the entire list mirrored the same priorities we’ve been focusing on for years, with little to show for it in terms of making American Healthcare better for patients, communities, and those providing care.

While I understand that the margin is vital to our existence, and our industry saw a precipitous drop from an average of 3.5% pre-pandemic to 0.2% in 2022, we cannot cost cut our way out of this historic financial challenge.

I think the better questions are: What is present in places that have managed to grow while effectively managing care delivery costs, and how can we deploy strategies and actions to do those things?

The pathway to the margin is simple enough. It involves keeping patients and retaining our clinical talent. It costs 5-10 times more for a health system to enroll and onboard new patients than to keep the ones we currently have. According to data from the American Medical Group Association (AMGA), out-of-network top-line revenue loss from patient leakage approaches a stunning $750,000 per physician annually. In today’s healthcare marketplace, nearly 40% of patients report total indifference to the care system where they receive care creating notable risk for costly patient churn, according to NRC Health Market Research.

Equally crucial to the financial challenges is the retention of our clinical talent. Nearly 60% of all healthcare costs are attributable to labor. Last week, Mass General Brigham announced they no longer accept new patients due to inadequate primary care clinicians amid a “historic and unrelenting” capacity issue. Losing a single physician reflects a loss of $1 million, while nursing shortages and turnover are equally crippling healthcare systems. For every one percent change in RN turnover costing or saving the average hospital nearly $400,000 per year. Reducing 20 travel RNs can save the average hospital almost $3.2 million while hiring a single RN saves an estimated $160,000.

The levers to counter the financial conditions of healthcare do not reside in cutting cost and finding new revenue streams. Prioritizing revenue and cost should focus squarely on creating conditions and organizational attributes proven to retain patients and our people. The experiences that render patient and team loyalty and retention are both known and accessible as the pathway to the financial pressures CEOs and their care systems are facing.

Building a place where care team members say, “This is my home, and I love the purpose we serve, the colleagues I work beside, the impact we create, and how leaders see, value, develop, and trust me. I will access all I have to help this place succeed based on all it has done for me,” and patients say, “No matter the circumstance, my care team is always kind, compassionate, and capable. My loved ones and I will always receive our care here.” These sentiments and experiences are where system durability, viability, and vitality reside.

The CEO’s priorities of increased revenue and diminished costs have solutions standing before us–creating places that are extraordinary for patients and teams by boldly committing, developing, resourcing, and building cultures that foster engagement and loyalty of our people and patients.

Increasing revenue and diminishing costs? All we have to do is create places where patients and people stay. Then, and only then, can we muster the ability to counter the greatest financial pressures our industry’s face.

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