5 Challenges Facing Tomorrow’s Hospital Administrators

More universities are offering a new twist on the MBA: an MBA emphasizing health care management. Hospital administration offers the perfect marriage between humanitarian goals and corporate know-how. However, tomorrow’s hospital managers will face tough decisions as technology advances and regulations evolve. With a good education and a lot of ingenuity, their solutions for the five biggest challenges facing hospitals today will shape the future of health care in the U.S.

Drastic Cost-Cutting Requirements

Tomorrow’s hospital administrators will be dealing with lean budgets that will require major cost-cutting. Some analysts estimate cuts will have to range from 10 to 20 percent if hospitals want to survive. As more people choose low-premium and high-deductible health plans, they are going to defer treatment whenever possible.

The key, according to researchers from the Camden Group, is to capture a greater market share even as per capita use-rates decline. This challenge will be magnified as health plans make medical group acquisitions, which could potentially disrupt referral patterns and patient flow. One potential growth opportunity is to capitalize on employer-hospital partnerships. Hospitals can market programs that will help organizations improve their employees’ health, cutting employers’ insurance costs while simultaneously growing market share.

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Stagnant Medicare and Medicaid Payments

To exacerbate cost-cutting difficulties, hospital administrators will have to deal with Medicare and Medicaid payments that aren’t going to rise soon. The American Taxpayer Relief Act, which averted the “fiscal cliff,” mandates provisions could cost hospitals at least $10.5 billion. Simultaneously, Medicaid payments are flat, Medicare is increasing by less than two percent and health plans are limiting their increases to five percent. The federal government, attempting to crack down on Medicaid and Medicare fraud, is auditing claims and conducting prepayment reviews like never before.

At the same time, hospital costs will rise. The Camden Group predicts the following increases:

  • Payroll increases of three percent or more
  • Benefit cost increases of up to 10 percent
  • Utility, supplies and drug costs increases of 10 percent minimum

To compensate, hospital administrators will have to monitor efficiencies like they never have previously. Telemedicine, mobile health applications and even simple services like the ability to text to find out ER wait times can cut time-burdens for personnel while increasing quality of care for patients.

Finding Capital for IT Investment

Investments in health care IT make up some of the largest burdens of the Affordable Care Act. Hospitals have to do more than acquire solutions for programs like electronic medical records (EMR). They have to demonstrate and document those programs meet meaningful use requirements. In addition, new regulations require paperwork elimination and an evolution to a data-driven environment. Add in ICD-10 adoption and you have a recipe for technological chaos.

A well-planned technology transition, however, may free up capital by lowering costs. Hospital administrators need to prioritize investments that will not only fulfill regulatory requirements but also deliver the greatest ROI. Nonprofit hospitals will have to double down on fundraising. They will also have to consider acquisition offers from private equity and public companies.

Dealing With Non-Profitable Hospitals and Medical Groups

The Camden Group predicts one out of every 20 acute-care hospitals may close by 2020. Patient and revenue volume will concentrate in the largest groups. Therefore, industry leaders must look for opportunities to consolidate facilities, services and personnel whenever possible.

Personnel Attrition at the Executive Level

On one hand, C-suite personnel attrition means more jobs for new graduates. On the other hand, the attrition is symptomatic of the changes and challenges in the health care system. Administrators should expect to create new or at least new additions to their executive teams. They should also make sure those executives have excellent labor relations skills to enhance physician/hospital relationships.

As medical technology evolves and government regulations change, hospital administrators face more challenges than before. At the same time, the hospital administrators of tomorrow have the chance to fundamentally change health care for the better.

Jon W

Jon works with various authors who are all experts in various health related fields. It is his goal to help share there knowledge, insights and experiences with others.

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