How to Manage a Hospital, 101

May 1st, 2013 - Robert Jordshaugen

Categories: Benchmarks Billing Electronic Medical Records (EMR/EHR) Practice Management

CEO - stop "Making decisions." If the data and metrics are correct, the decisions are self evident. Spend time instead developing your team, your culture of communication, and ensuring that you are measuring the right activities.

Stop managing departments and start managing patients. The silos in the hospitals are not sustainable. Measure the collected revenues and incurred incremental costs for the entire patient experience, and use this as the basis for investment decisions. Empower the department directors to manage their departments and be responsible for the outcomes.

Stop micromanaging. Hold clinical department directors accountable for percent of collected revenue, but make sure they have the tools and training to be effective. Use activity based costing to measure impact of the next patient through the door. Measure the entire interaction, not individual departments. Use this as a way to measure the economic impact of EMR.

Make the CFO responsible for measurements, not for revenue cycle. The revenue cycle falls to the COO or operations director. The person who counts the outcomes cannot simultaneously attempt to deliver results - conflict of interest.

"Who is my customer and what is my product" is the question every person needs to ask. Hospitals have skewed understanding of which activities are profitable, when they need to ask which patients are profitable. Believing that radiology is profitable and the ED is not is ridiculous if 50% of radiology patients come from the ED. Understand the lifetime value of each patient.

Get rid of the budgeting process. Use forecasting, have the department directors be accountable for labor productivity. Stop forcing people to overestimate needs in anticipation of budget cuts. We micromanage the small stuff and have to got the CEO for a necessary purchase, but end up hiring too many people in anticipation of layoffs.

Pre-register everybody that you know is coming. Why are we still stacking people in waiting areas? Use MSE to get the non-emergent patients out of the ED. Fill excess capacity. Stop overloading the schedules and making everyone wait forever in the morning, while having clinical people sitting around in the afternoon.

Build teams. Drop the politics. Work together. Get rid of silos.

Making these and some other changes led to a 15% increase in collected revenue in a small hospital in a bad local economy in 2009. 35 Bed hospital lost $3 million from operations in 08, broke even 09. Profits in 09 exceeded $2M over loss in 08. Not one layoff, change of accounting, change of contracts, or of patient mix, except higher percentage of self pay and Medicaid.

It is possible.

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