More than a building

04.08.14 by Lola Butcher

4 CEOs rethink their hospitals' place in the new, wide world of health care

Framing the issue

• The traditional volume-based business model for the general acute care hospital is in its death throes.
• The successful business model of the future hinges on which emerging health care payment strategies prevail.
• Surviving the next few years will require leadership and financial wherewithal to adapt to a new business model as revenues decrease.
• Forward-thinking health care systems are developing strategic plans that redefine the hospital's role in the continuum of health care services.
Every hospital executive knows it, but it's still hard to hear. • "It is very difficult, for a lot of reasons, for the traditional community hospital of a few years ago to exist on its own," says Michael Sachs, chairman and chief executive officer of the Sg2 health analytics firm. "There are going to be exceptions, but the general 200- or 250-bed community hospital that is 50 percent Medicare, 10 percent Medicaid and the rest commercial — that's going to be a tough model." • Indeed, regardless of payer mix, bed size or ownership status, the business model for American hospitals is in a time of upheaval. As health care moves from a volume-based payment system to one that rewards value — cost divided by quality — inpatient hospital utilization is no longer the breadwinner it used to be. In fact, emerging pay models discourage hospital use as much as possible. • "Not only do we need to transform our hospitals, we really need to redefine them," says John Bluford, president and CEO of Truman Medical Centers in Kansas City, Mo. "The future of the hospital can't be the building on the corner or down the street. It's got to be immersed in the daily culture of the community that it serves." • Bluford and other forward-thinking health care executives shared their strategies for the future with H&HN.


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