A changing female demographic has created new opportunities for hospitals to grow the women's health service line into much more than just labor and delivery.
Southern Hills Medical Center shut down its obstetrics department last fall—but when it comes to the women's health service line at the Nashville hospital, CEO Tom Ozburn remains optimistic. His reasons, as well as the events that led the 114-staffed-bed facility to stop delivering, have to do with recent developments—both good and bad—in the women's health market.
First, the bad: Recruitment challenges, emergency department coverage shortfalls, and high malpractice rates are straining the OB/GYN work force nationwide. The group of physicians who covered obstetrics services for Southern Hills, once seven-strong, had lost members for a variety of reasons and was struggling to cover EDs at two hospitals with its three remaining physicians. Overworked and struggling with costs, they decided to pick just one hospital—a nearby sister facility, Stone Crest Medical Center in Smyrna, TN, that is part of HCA Inc.'s TriStar Health System, which also owns Southern Hills. Despite trying a number of options, Ozburn couldn't recruit replacement physicians or find another group to maintain coverage. Outcry in the local community was fast and vocal.
While it is a fairly low-margin service, obstetrics is the cornerstone of many women's health programs because it provides an early and long-lasting touch point for a patient population that is said to be responsible for 80% of healthcare decision-making. If a patient is satisfied with her labor and delivery, she and her family may loyally bring in downstream revenue for 30 years or more, the logic goes.
Or so it went. Women's health has evolved into a birth-to-death service line that crosses departments from cardiovascular to cancer care, in part because the female population has changed. Women are more mobile than in the past, so their ties to hospitals may be broken and reformed several times between child-bearing age and retirement. Additionally, physicians are constantly discovering women's unique diagnostic, screening, and treatment needs, even for some fairly universal conditions. That has created new opportunities to win loyalties through gender-specific cancer screenings, heart care, hip replacements, and a wide range of other services.
Success in the service line hinges on knowing the local market and focusing on the services the women in the community need and want, Ozburn says. For most hospitals, that includes obstetrics. But deliveries had been on the decline at Southern Hills Medical Center for some time; the patient population was getting older, causing deliveries to drop from a high of 1,200 per year to slightly more than 400. The hospital was running out of room for medical-surgical patients while beds on the OB floor often went unfilled. Given the changing demographics, cutting back on delivery services was in many ways inevitable, and the unfortunate closure created new opportunities for the hospital to refocus its service line.
"While financially we took a hit, particularly in the last months of 2008, I think that it's going to enable our hospital to kind of adjust and really fit and respond to our community better than we were because we'll be able to open up more med-surg beds," Ozburn says.
The hospital plans on reaching female patients by beefing up other services central to women's health—by recruiting gynecologists, emphasizing cardiovascular care, adding diagnostic services, and exploring wellness programs—and redesigning facilities to appeal more to a female audience.
Success Key No. 1: Find your niche
It's not that obstetrics isn't still the focal point of women's health for many hospitals. In fact, inpatient obstetrics utilization will likely grow thanks in large part to a growing C-section delivery rate. A jump in demand for voluntary C-sections coupled with research cautioning against post-cesarean vaginal births have pushed the national average to about 33%; and that could be as high as 40% by 2018, according to projections from Illinois-based Sg2.
But even hospitals with large obstetrics programs are looking to capitalize on the full-service approach to women's health. The service line has become so expansive that it overlaps with almost every other major hospital service line, and directors are increasingly looking for niches that align with the hospital's priorities and help it stand out from competitors, says Mary Anne Graf, vice president for women's and children's services for Bon Secours Richmond Health System, a four-hospital network in Virginia.
Heart screenings, joint replacement, incontinence procedures, bone density testing, breast reconstruction, fertility programs, spas, fitness centers—the wide range of ancillaries and services can become overwhelming when trying to plan strategically. "You could fill your week with events that never get back to who you are and what you need to do," says Graf. "In order to sort out the morass, what I do is combine a number of variables to figure out what's really going to benefit the institution."
Graf relies on three primary indicators: brand recognition, increase in volume (particularly new patients), and profit margin. Because the latter two are difficult to measure for a service line that often brings more value through downstream than immediate revenue, branding takes on particular importance, especially for non-OB offerings, she says.
"I look at it from a macro perspective, not a micro perspective. You can get all caught up in how many people came to one class and whether one program made money, but what's important is, are you moving brand, are you moving volume, and are you moving margins?" Graf says. "If we follow that rule . . . it allows us to focus on the core business and hone in on what we do."