FOURTH QUARTER:
Volume 2, Number 4
Nov 2007-Jan 2008
As we continually strive to operate at the “intersection of medical mission and profit margin”, we are pleased to announce the following two new extensive chapter updates, with much more, in the November 2007 issue of our subscription guide.
Improving Operations Management to Achieve Strategic Objectives
By: Gregory O. Ginn; PhD, MBA, CPA
By: Hope Rachel Hetico; RN MHA, CMP™
Since the middle of the 1980s, hospitals have operated in an extremely competitive environment. During this period, all were under increasing pressure to improve quality and reduce costs. Furthermore, healthcare today has come to be viewed as less of a human service and more of a commercial service; especially as new trends open up different approaches to medicine in 2008 and beyond.
In responding to this dynamic situation, healthcare CXOs, administrators, physician-executives and nurse leaders have adopted management techniques from other industries in an effort to improve quality and reduce costs. Perhaps this transfer of ideas is most apparent in the functional area of health entity operations management that traditionally deals with facility location, capacity, supply chain management, inventory systems, scheduling, layout, and of course, quality management.
And so, this chapter first written by Professor Gregory O. Ginn has now been given extensive pragmatic update by Hope Rachel Hetico. In this issue, she examines leading competitive trends and reviews some of the most promising avenues for improving hospital operations; including data management, process management and human resource development; all of which impact financial performance.
Of central importance is the level of leadership required to recognize these changing trends along with a plethora of new industry abbreviations:
1. Patient-Focused Healthcare [PFH]
2. Implementation of the Deficit Reduction Act [DRA]
3. Identification of “Never Events” [NEs]
4. Pay-for-Performance Initiatives [P4P]
5. Hierarchical Condition Category Management [HCCM]
6. Consumer-Directed HealthCare Plans [CDHCPs]
7. Telehealth and Medicare
8. Hospital, Clinic and Physician Pricing Transparency
9. Evidence-Based Medicine [EBM]
10. Rise of Retail Medicine [RM] and Convenient Care Centers [CCCs]
12. Development of Social Health Maintenance Organizations [SHMOs]
13. Use of Hospitalists and Hospital-Based Medical Groups [HBMGs]
14. Use of On-Site Medical Group Staffing [OSMGS]
15. Growth of Boutique (Concierge) Medical Practices
16. Government-Enabled Patient “Bounty Hunters”, etc.
Professor Hetico also highlights the importance of non-economic performance measures and concludes with a discussion of strategic planning and executive leadership.
The goal of this important update is to present emerging managerial concepts and trends that show how hospitals can use operations management to improve their competitiveness by exhibiting greater flexibility and higher quality, and as a result achieve better financial performance.
It is a “must read” for all involved in this challenging and exciting space!
Research and Financial Benchmarking in the Healthcare Industry
By Robert James Cimasi; MHA, ASA, CBA. AVA, CM&AA, CMP™
By Todd A. Zigrang; MHA, MBA, CHE
By Anne P. Sharamitaro; Esq.
Our next update for this issue focuses on the skills and knowledge sources required for healthcare financial analysis that may differ from those needed for general industry research. And so, this extensive chapter from Health Capital Consultants LLC, of St. Louis, MO, examines research process and sources of information needed for healthcare financial analysis-related activities; including benchmarking and business valuations to assist internal analysts and financial executives in being better informed about the application of research methods.
Of central topical import are the checklists, tables and case model for this important issue:
A. Sources of Healthcare Business and Industry Research
1. Types of Research and their Organization
a. Specific and General Research
b. Organizing Research and Archives Departments
2. Specific Research
a. Documents
b. Site Visit / Interview Information
3. General Research
a. Physician Compensation Data
b. Managed Care Environment and Penetration
c. Medical Specialty Trends
d. Competition
i. Porter’s Five Forces of Competition
e. Demographics
f. Economic Trends: Local and National
g. Direct Market Comparable Transactions
h. Guideline Publicly Traded Companies
i. The Assessment of Risk
B. The Uses of Research in Financial Benchmarking
1. Introduction
2. Sources of Benchmarking Data
a. American Medical Association Surveys
b. Group Practice Associations Compensation and Production Surveys
c. Medical Practice Expense Surveys
d. Subdivision of Benchmarking Data by Criteria
e. Benchmarking Data Sources for Hospitals, Ambulatory Surgery Centers, and Other Healthcare Entities
i. Hospital Surveys
ii. Ambulatory Surgery Center Surveys
iii. Management Services Organization Surveys
f. Other Benchmarking Sources
3. Benchmarking the Subject Entity’s Data Against the Industry
a. Usefulness of Benchmarking in the Valuation Engagement
b. Financial Ratio Analysis
c. Operational Performance Benchmarking
C. Summary
Case Model: Evaluating CD Practice
Evaluating CD Practice: Case Model 1
Checklists
Checklist 1: Selection, Evaluation, and Restatement of Benchmarking Data
Checklist 2: Financial Ratio Analysis
Tables
Table 1: Organization of General and Specific Research
Table 2: Multi-specialty Physician Compensation Annual Surveys
Table 3: Sources of Market Transaction Data
Table 4: Surveys Including Revenue Benchmarking Data
Table 5: Compensation Criteria
Table 6: Gross Charges Criteria
Table 7: Collections Criteria
Table 8: Accounting Criteria
Table 9: Surveys Including Expense Benchmarking Data
Table 10: Equipment Criteria
Table 11: Staffing Costs Criteria
Table 12: Dues and Education Criteria
Table 13: Insurance Criteria
Table 14: Occupancy Cost Criteria
Table 15: Supplies Criteria
Table 16: Taxes Criteria
Table 17: Surveys Including Utilization Benchmarking Data
Table 18: Total RVU Criteria
Table 19: Work RVU Criteria
Let the experts from Health Capital Consultants, LLC provide you with current data that helps convert information into actionable knowledge for the financial enhancement of your healthcare organization.
Going forward, we are pleased to launch a new live communication forum for our Guide. The blog: www.healthcarefinancials.wordpress.com is lightly moderated and dedicated to meeting your interactive needs “between and about quarterly issues.” As a community of peers, allow us to serve you.
Blog today … Subscribe and Succeed tomorrow!
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