Healthcare has always been a dynamic market, but the recent volatility created by COVID-19 and its variants has revealed just how critical these institutions are and how important planning can be for hospitals and health systems to adapt and grow. Healthcare facility managers and other leaders need to pay attention to three main drivers.
Staffing, recruitment, and retention form today’s primary concerns. Revenue generation to support those recruitment efforts runs a close second, followed by an ongoing shift to holistic care that prioritizes good health as an antidote to expensive, elaborate procedures and long treatments for chronic illnesses. Managers and their peers can consider the following insights to navigate these industry drivers.
Drivers: A closer look
Staffing. In every market, a widening gap continues to expand between providers and needs. Depending on the location of the system, it is essential to synthesize a recruitment plan for staff and other positions with the project plan. For example, it can be tough to get a cardiologist to move to rural Alabama even if the analytics suggest the community can support a cardiology program. Long-term, can the institution provide a safe, efficient, and supportive environment for the physician and staff to provide that service line to the community?
At the same time, today’s leaders worry about retaining the providers they have and recruiting new ones to help grow their programs, all while patient volumes are slowly climbing back to pre-COVID-19 levels.
Many people who have been barred from routine visits and elective surgeries are coming out now that some pandemic restrictions are easing, and healthcare leaders are seeing an increase in volume for regular appointments, as well as some residual COVID-19 patient load. Sicker patients are emerging in oncology, cardiology, and other specialties because of delayed detection and treatment during the pandemic shutdowns. As these patients flood in, there is an opportunity for growth, adding new service lines and staff to accommodate the changing needs of patients amidst the difficulties of navigating the ongoing pandemic.
Revenue is always important for any business, even for human-centered organizations such as hospitals. Healthcare institutions want to maximize the potential of revenue producing services. While leaders will always provide some services that do not generate significant revenue but are necessary functions, they need to offer the right mix of services that includes a heavy dose of revenue-producing services to balance the necessary functions that do not generate substantial income. Revenue produced today becomes the expansion of tomorrow, and leaders should always be thinking one step ahead.
Consumer-driven healthcare, a once-popular term that is less prevalent today, includes a focus on wellness, access, and creating a consumer-friendly environment. But there is not reimbursement for wellness, only the services for healing that are provided. Healthcare leaders are trying to navigate ways to provide accessibility to holistic and wellness-focused programs that also can provide much needed revenue.
Decisive strategic planning that aligns facility needs with programs, services, and a sustainable staffing plan is key to achieving this diverse set of objectives.
The initial step in decisive planning is to create a master plan and break it down into phases that create the desired symbiosis between revenue generation and community building through new facilities. As leaders plan for expansion, make sure that each project has built-in revenue growth, pairing high-revenue projects with lower-revenue projects to build incremental growth, thereby avoiding budget pressures.
For example, developing a new women’s center and NICU is a project that traditionally does not produce substantial growth in margin. Therefore, decisive planning might mean focusing Phase 1 on an emergency department renovation and expansion that creates a more efficient patient and workflow capable of treating more patients in an appropriate environment with the same number of providers. This approach could provide the revenue needed to fund a strategic initiative to grow women’s and infant services as a Phase 2 project.
Some older hospitals merely need to replace beds and services that need an upgrade. But a one-to-one replacement provides no incremental gain in revenue to fund future construction, so teams must be creative when developing new revenue sources. On the other hand, not replacing those beds will result in a loss of revenue because patients will go to competitors, and the hospital will lose market share. It is crucial to build phased projects and budgets that work together as part of a larger whole.
Many facilities understandably seek to shrink project budgets to save money. Instead, leaders could consider investing an additional 10 percent of the project budget into the infrastructure necessary for the next project. This simple investment can make the next project more manageable and less disruptive to operations if the infrastructure is planned and in place.
Ambulatory overlay strategies are used to place providers in key locations throughout primary and secondary service areas. These strategies make it easier for a patient to find a primary care provider. The aggressive systems that are interested in growing their market share use this strategy to position providers in the community and strengthen the referral system back to the hospital.
Because of the success of this strategy, most master plans include an ambulatory component. Capital allocation for off-campus facilities is becoming a larger percentage of budgets for hospitals and health systems. It is not only about making upgrades to the main campus but also about positioning facilities and services in convenient locations within the community that can tie back to the hospital and lay the groundwork for future expansion.
Connect with institutions for staff education. Education is a critical component to cultivate needed staff to support expansion and growth for the future. Even in rural locations, hospitals will develop connections with nursing colleges, allied health organizations, and residency programs to recruit young doctors. Hospitals use events and recruitment gatherings to draw students into their programs with the goal that they will stay with the hospital as they begin their careers.
Quality staff respite areas are essential for recruitment and retention. Traditionally, there has been a focus on visitors and family support, but now we include staff support and respite spaces in this equation. The pandemic has shed light on the difficulties that healthcare workers endure every day as part of their job and the importance of the ability to get away, even for just 15 minutes, while staying on campus.
Such opportunities provide much-needed respite and are more relaxing than a quick lunch in a break room. Employee respite spaces offer areas that are close to care but provide a quality escape from stress. Such spaces are assets for existing staff and as part of the recruiting effort.
Insight within drivers
Providers. In many ways, a hospital is only as good as its providers, so healthcare leaders really have to recruit exceptional providers, and having a top-tier facility is becoming increasingly more important in that recruitment effort. If you do not have great modern facilities, recruits and patients will not want to come.
Outreach. Good providers, especially in primary care, also create relationships with the community, which makes your hospital the place to go. If the campus is attractive for people to come to for a reason other than obvious medical needs, people will go there for community outreach events and become familiar with the hospital, making it their first choice when they need medical services. Outreach activities such as farmers markets, walking paths, free nutrition classes, quit-smoking and -vaping programs engage the community for reasons other than basic hospital services. These activities do not generate revenue, but they are an important investment in relationships that will lead to revenue-generating activities and growth in the future.
Contracted services in house, such as a spa or a healthy restaurant inside the hospital, can be a source of revenue in their own right because the hospital is not the operator, but hospital leaders can work with a service provider to lease space in the building and collect rent. Ancillary opportunities to generate funds are a great way to offset lower revenue activities, such as replacing outdated infrastructure.
Optimizing the emergency department. Older emergency department facilities are not designed to meet today’s challenges — not only a global pandemic but also drug abuse and violent crime in many cities — that affect the health and safety of the public and healthcare workers alike. Hospitals are tasked with providing a space that addresses issues such as safety and communicable diseases in a better way. More efficient layouts are needed to optimize the efforts of increasingly fewer staff members, as well as adequate personal protection equipment and infrastructure support that enables them to do their jobs.
The pandemic has shown how essential healthcare workers are in any type of crisis and how critical they are to our survival and continued evolution as a society. One of the benefits of a public health crisis has been an increased respect for the workers and what they do daily. Hospital leaders and planners are now elevating staffing to the top of the priority list as they plan.
Whether it is a long-term staffing and recruiting plan or a facility expansion that relies on a delicate navigation of both sides of a balance sheet, it is important to remember that planning is not just for tomorrow. It is for five and ten years in the future. Managers need to be sure their sights remain above the horizon on key planning issues and that the entire facility portfolio is aligned with the strategic plan to navigate the drivers of healthcare today.
Steven M. Alby, NCARB, LEED AP, is vice president – healthcare with Goodwyn Mills Cawood. He can be reached at email@example.com.