Hospital CEOs: Business model limbo is biggest challenge

As hospitals struggle to balance reduced reimbursements and eroding budgets, they simultaneously are transitioning away from the fee-for-service business model to a value-based system under health reform, CEOs reported at the second annual Huron Healthcare CEO Forum.

"We are definitely moving toward fixed or bundled payment and away from making margin on volume. The old strategy is quickly becoming the high cost/low margin strategy. Unfortunately, we get to run these two opposing strategies simultaneously," Dan Wolterman, president and CEO of Houston's Memorial Hermann Healthcare, said in a press release yesterday from the healthcare management consulting firm. "You can live in two business models for a while, but not forever."

Hospitals undoubtely reported uncertainty with health reform, with some charging into new business models, while others cautiously experimenting with new approaches at a slower pace.

"But there was no one at the event who thought that the current model would be sustainable in the future," the report states.

The key take-away, according to the report, is that the most challenging issue hospital CEOs are facing is the business model paradigm shift from volume to value. However, they also see it as a major opportunity to transform healthcare for the better with higher quality care, according to the report.

"We have a lot of opportunity to fix 99 percent of the dumb stuff we've done. We have the chance to do it right," WakeMed Health & Hospitals President and CEO William Atkinson said in the report. "If it were easy, I wouldn't want to do it. I signed on for heavy lifting."

To learn more:
- read the press release
- check out the report (registration required)

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