Jon M. Thompson

Hospital marketing orientation and managed care processes: are they coordinated?

EXECUTIVE SUMMARY The hospital marketing function has been widely adopted as a way to learn about markets, attract sufficient resources, develop appropriate services, and communicate the availability of such goods to those who may be able to purchase such services. The structure, tasks, and effectiveness of the marketing function have been the subject of increased inquiry by researchers and practitioners alike. A specific understanding of hospital marketing in a growing managed care environment and the relationship between marketing and managed care processes in hospitals is a growing concern. Using Kotler and Clarkes framework for assessing marketing orientation, we examined the marketing orientation of hospitals in a single state at two points in time—1993 and 1999. Study findings show that the overall marketing orientation score decreased from 1993 to 1999 for the respondent hospitals. The five elements of the Kotler and Clarke definition of marketing orientation remained relatively stable, with slightly lower scores related to customer philosophy. In addition, we evaluated the degree to which selected managed care activities are carried out as part of its marketing function. A significant (p < .05) decrease in managed care processes coordinated with the formal marketing function was evident from 1993 to 1999. With increasing numbers of managed care plan enrollees, hospitals are likely focusing on organizational buyers as important customers. In order to appeal to organizational buyers, hospital executives may be focusing more on clinical quality and cost efficiency in the production of services, which will improve a hospitals position with organizational buyers.

High-Performance Teams for Current and Future Physician Leaders: An Introduction

The scope of patient management increasingly crosses the defined lines of multiple medical specialties and services to meet patient needs. Concurrently, many hospitals and health-care systems have adapted new multidisciplinary team structures that provide patient-centric care as opposed to the more traditional discipline-centered delivery of care. As health care continues to evolve, the use of teams becomes even more critical in allowing interdependence between multiple disciplines to provide excellent care delivery and ongoing patient management. The use of teams permeates the health-care industry (and has done so for many years), but confusion about the structure, role, and use of teams contributes to limited effectiveness. The health-care industrys underuse of the fundamentals of corporate teamwork has, in part, created ineffective team leadership at the physician level. As the first in a series of documents on teamwork, this article is intended to introduce the reader to the rudiments of team theory and to present an introduction to a model of teamwork. The role of current and future physician leaders in ensuring team effectiveness is emphasized in this discussion. By educating health-care professionals on the foundations of high-performance teamwork, we hope to accomplish two main goals. The first goal is to help create a common and systematic taxonomy that physician leaders and institutional management can agree on and refer to concerning the development of high-performance health-care teams. The second goal is to stimulate the development of future physician leaders who use proven teamwork principles as a powerful modality to achieve efficient and optimal patient care. Most importantly, we wish to emphasize that health care, both philosophically and practically, is delivered best through high-performance teams. For such teams to perform properly, the organizational environment must support the team concept tangibly. In concert, we believe the best manner in which to cultivate knowledge and performance of the health-care organizational mission and goals is by using such teams.

The relationship of financial and mission factors to the level of uncompensated care provided in California hospitals.

&NA; Community hospitals in the United States have experienced a substantial rise in the burden of uncompensated care over the past few years. Debate continues, however, about whether hospitals, especially private not‐for‐profits, are providing sufficient levels of uncompensated care. Increased scrutiny regarding uncompensated care and the community benefit of not‐for‐profit hospitals may be fueled in part by the growing profitability of community hospitals. This study assesses how and whether a hospitals financial performance, mission characteristics, or other significant factors influence its provision of uncompensated care. The study sample consists of 193 short‐term, private, acute care community hos hospitals in California. Results from multivariate regression suggest that free cash flow is positively associated with the provision of uncompensated care in not‐for‐profit hospitals, whereas a higher level of debt is related to a lower level of uncompensated care. Ownership type (for‐profit versus private not‐for‐profit) does not make a signifi significant difference in the provision of uncompensated care, and overall levels of uncom uncompensated care in the local market are positively associated with a hospitals level of uncompensated care.

Fundamentals of service lines and the necessity of physician leaders.

In the demanding and unpredictable environment of the health care industry, hospitals and health systems continue to search for ways to improve the efficiency and quality of care provision and, thus, thrive. Service line organization in health care, a concept that was popularized in the past, has recently experienced a resurgence, spanning the gamut from small community hospitals to large academic medical centers. The modern service line has transformed into an organizational tool that provides hospitals and health systems with a novel approach to achieve the goals of efficient and effective care. Physician leaders can play an integral role in the management of service lines, using a combination of management skills and clinical expertise to provide the oversight and direction necessary for assuring excellence in clinical care and value in its delivery. This article presents an overview of service line structure, implementation, implications, and the role of the physician-leader.

Organizational and Market Factors Associated with Leadership Development Programs in Hospitals: A National Study

EXECUTIVE SUMMARY Effective leadership in hospitals is widely recognized as the key to organizational performance. Clinical, financial, and operational performance is increasingly being linked to the leadership practices of hospital managers. Moreover, effective leadership has been described as a means to achieve competitive advantage. Recent environmental forces, including reimbursement changes and increased competition, have prompted many hospitals to focus on building leadership competencies to successfully address these challenges. Using the resource dependence theory as our conceptual framework, we present results from a national study of hospitals examining the association of organizational and market factors with the provision of leadership development program activities, including the presence of a leadership development program, a diversity plan, a program for succession planning, and career development resources. The data are taken from the American Hospital Associations (AHA) 2008 Survey of Hospitals, the Area Resource File, and the Centers for Medicare & Medicaid Services. The results of multilevel logistic regressions of each leadership development program activity on organizational and market factors indicate that hospital size, system and network affiliation, and accreditation are significantly and positively associated with all leadership development program activities. The market factors significantly associated with all leadership development activities include a positive odds ratio for metropolitan statistical area location and a negative odds ratio for the percentage of the hospitals service area population that is female and minority. For‐profit hospitals are less likely to provide leadership development program activities. Additional findings are presented, and the implications for hospital management are discussed.

Performance of freestanding inpatient rehabilitation hospitals before and after the rehabilitation prospective payment system.

BACKGROUND Inpatient rehabilitation hospitals provide important services to patients to restore physical and cognitive functioning. Historically, these hospitals have been reimbursed by Medicare under a cost-based system; but in 2002, Medicare implemented a rehabilitation prospective payment system (PPS). Despite the implementation of a PPS for rehabilitation, there is limited published research that addresses the operating and financial performance of these hospitals. PURPOSE We examined operating and financial performance in the pre- and post-PPS periods for for-profit and nonprofit freestanding inpatient rehabilitation hospitals to test for pre- and post-PPS differences within the ownership groups. METHODS We identified freestanding inpatient rehabilitation hospitals from the Centers for Medicare and Medicaid Services Health Care Cost Report Information System database for the first two fiscal years under PPS. We excluded facilities that had fiscal years less than 270 days, facilities with missing data, and government facilities. We computed average values for performance variables for the facilities in the two consecutive fiscal years post-PPS. For the pre-PPS period, we collected data on these same facilities and, once facilities with missing data and fiscal years less than 270 days were excluded, computed average values for the two consecutive fiscal years pre-PPS. Our final sample of 140 inpatient rehabilitation facilities was composed of 44 nonprofit hospitals and 96 for-profit hospitals both pre- and post-PPS. We utilized a pairwise comparison test (t-test comparison) to measure the significance of differences on each performance variable between pre- and post-PPS periods within each ownership group. FINDINGS Findings show that both nonprofit and for-profit freestanding inpatient rehabilitation hospitals reduced length of stay, increased discharges, and increased profitability. Within the for-profit ownership group, the percentage of Medicare discharges increased and operating expense per adjusted discharge decreased. PRACTICE IMPLICATIONS Findings suggest that managers of these hospitals have adapted their administrative practices to conform with the financial incentives of the rehabilitation PPS. Managers must continue to control costs, increase discharges, and reduce length of stay to remain financially viable under the rehabilitation PPS.

Operational and Financial Performance of Newly Established Hospices

The objective of the study was to examine the financial and operating performance of newly established, free- standing hospices relative to existing, freestanding hospices. A nonparametric median test was used to compare the median values of operating and financial performance measures between newly established hospices and existing hospices. Operating and financial data were measured for the 2 groups using cost report data from the Centers for Medicare and Medicaid Services. The authors sampled 44 new, freestanding hospices and selected 312 freestanding existing hospices and analyzed their data over 2 years from 2002 to 2003. The study found that 91% of these new hospices were owned by for-profit organizations and were located in the southern region of the United States. New hospices served fewer patients; however, they had a longer length of stay compared to existing hospices. They offered fewer imaging services and radiation therapy services. New hospices generated significantly higher revenue but incurred significantly higher expenses. The results suggest that longer lengths of stay allow these newer hospices to increase revenue and improve overall profitability.

Analysis of cash flow in academic medical centers in the United States.

Purpose To examine cash flow margins in academic medical centers (AMCs; i.e., teaching hospitals) in an effort both to determine any significant differences in a set of operational and financial factors known to influence cash flow for high- and low-cash-flow AMCs and to discuss how these findings affect AMC operations. Method The authors sampled the Medicare cost report data of 103 AMCs for fiscal years 2005, 2006, and 2007, and then they applied the t test to test for significant mean differences between the two cash flow groups across operational and financial variables (e.g., case mix, operating margin). Results Compared with low-cash-flow AMCs, high-cash-flow AMCs were larger-bed-size facilities, treated cases of greater complexity, generated higher net patient revenue per adjusted discharge, served a significantly lower percentage of Medicaid patients, had significantly higher average operating profit margins and cash flow margin ratios, possessed a higher number of days of cash on hand, and collected their receivables more quickly. Conclusions Study findings imply that high-cash-flow AMCs were earning higher cash flow returns than low-cash-flow AMCs, which may be because high-cash-flow AMCs generate higher patient revenues while serving fewer lower-paying Medicaid patients.

HealthSouth's Inpatient Rehabilitation Facilities: How Does Their Performance Compare With Other For-Profit and Nonprofit Inpatient Rehabilitation Facilities?

OBJECTIVES To assess the financial and operational differences in freestanding inpatient rehabilitation facilities (IRFs) that are operated by HealthSouth Corporation relative to other for-profit and nonprofit system-affiliated ownership groups. Since 2003, when it faced fraud charges and financial penalties, HealthSouth has experienced new management and refocused its business strategy. Because HealthSouth is the largest provider of freestanding IRF services, it is important to understand how their performance may differ relative to other ownership groups. DESIGN We used the Mann-Whitney U test to assess differences in median values for financial and operational variables of HealthSouth-owned IRFs compared with other for-profit system IRFs and nonprofit system IRFs. SETTING System-affiliated freestanding IRFs in the United States. PARTICIPANTS Sixty-four HealthSouth IRFs, 18 nonprofit system-affiliated IRFs, and 18 for-profit system-affiliated IRFs. INTERVENTIONS Not applicable. MAIN OUTCOME MEASURES Net patient revenue per adjusted discharge, operating expense per adjusted discharge, salary expense per full-time equivalent, and cash flow margin. RESULTS HealthSouth IRFs had significantly lower net patient revenue per adjusted discharge and operating expense per adjusted discharge; however, its cash flow margin was significantly higher than other comparison groups. HealthSouth IRFs treated a higher case mix of patients relative to these comparison groups. CONCLUSIONS The financial and operating performance of HealthSouth IRFs is stronger than other ownership groups. Strong cash flow will enable HealthSouth to pay down long-term debt.

Revisiting employee benefits managers.

This article presents a case study of health purchasing practices of a sample of Employee Benefits Managers (EBMs) in a medium-size metropolitan area who were interviewed in 1991 and again in 1998. Findings show that employers have become less paternalistic in their health benefits; shifted plan options from indemnity coverage to managed care; increased employee cost-sharing; and placed greater decision-making on employees. EBMs embrace choice in health plans, have influenced the provider networks of plans, and have specified requirements for plan performance, however, use of quality information is limited.