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3 Actions That Could Save Community Hospitals

Philip Betbeze, for HealthLeaders Media, December 10, 2010

Because I like to think I am as smart as the next guy, and because it's pretty much my job, I get a kick out of trying to predict what our healthcare system will look like 10 years from now.

It doesn't look good for independent standalone community hospitals, unless your hospital happens to be of the critical access variety. Why do I believe that? Well, think of hospitals in the 30-300-bed category as the hardware store in the middle of town. Think of the bigger, multi-hospital systems as the Home Depots of the healthcare world. Now, before you crush me with comments at the bottom of this page, I'm not saying that it's exactly a direct metaphor for what's happening in healthcare. It's overly simplistic, but stay with me.

So not only do you have organizations with huge resources competing, directly in some cases, with small one-off shops that offer essentially the same products and services, but now you have both parties' biggest customer saying they're going to reward for value and outcomes. Uh-oh. It's not that it's near impossible for smaller hospitals with limited clinical integration and fewer IT resources to offer equivalent care of the Hospital Depots, it's not. And they can. But can they prove it to skeptical payers, employers, and most of all, the federal government? In the new era, data will be king, and if you can't show you're at least as good—and as cheap—as your competitors, you're likely not going to be around long.

I talked to Skip Cimino a little while back. He's president and CEO of Robert Wood Johnson University Hospital Hamilton in New Jersey. He used to be in flooring and tile. But before you judge him as unqualified to run this 284-licensed-bed hospital on that history, he built the company in 20 years from $19 million in annual revenue at its locations in central New Jersey to a seven-state operation with $140 million in annual revenue. He's also served in the Governor's cabinet in New Jersey, but that's almost beside the point. He and his leadership team made a hospital in New Jersey profitable (although a 1% margin is nothing on which he's going to rest). That's probably enough, but in case it's not, the hospital has also won a Baldrige Award.

Given the forces he sees at work in healthcare, Cimino sees perhaps at least three actions community hospitals should take to remain viable long-term, although to be fair, there are dozens more routes an independent can take to remain relevant.

1. Join a system while preserving some independence:
While RWJ-Hamilton has long been part of the Robert Wood Johnson System, which counts the 600-bed university hospital in New Brunswick as its flagship, "everyone kind of did their own thing," says Cimino. "Part of our future will be the ability to clinically integrate with one of the top hospitals in the country, which allows our residents in this area to have top notch care from a tertiary center without having to leave to go to Philly or New York City."

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2 comments on "3 Actions That Could Save Community Hospitals"


scott Bork (12/14/2010 at 5:26 AM)
Sorry, but I can't agree with this article largely embedded with advertisement for the big box guys, why everyone should connect with this hospital or any other large facility. The killer is the ending statement "If you ignore all this opportunity for innovation, perhaps you still rest comfortably, believing you can make up all your disadvantages with a family feel and a local vibe". First of all you are assuming the smaller hospital is a disadvantage! Ask the public and you will be surprised to find more and more patients are doing exactly the opposite of your proposal. They are choosing the smaller hospital for just that[INVALID]a local commitment to serving the community they live in with yes, a dedicated team with yes a very real family feel. The smugness is revolting, but given the state of medical errors, big system inefficiencies, a profound difference in quality outcomes and lower infection rates, and the future may be exactly opposite[INVALID]developing niche hospitals focused on (sorry to say this) family feel and local vibe. Small hospitals can't offer the high level neurosurgery or the open hearts[INVALID]yet. 5 years ago we shipped everyone for a heart cath intervention. Today thousands are successfully done each day in small hospitals with excellent outcomes, against the same rhetoric from years ago, saying the same thing that it couldn't be done. The future of healthcare lies in collaboration, but not the smugness that the family feel doesn't count. It certainly does, and it will continue to change the direction of the big box stores in the future.

bob (12/10/2010 at 4:32 PM)
One modest comment on the first of Skip's good recommended actions for community hospitals: It is more important to recognize that any community hospital is already involved in one or more hospital systems than it is to decide to join one. Anyone examining the behavior of the patients and the members of the medical staff of any community hospital is able to identify how closely the community hospital is involved with one or more systems, even when there is no formal communication at all between the management teams, Boards of Trustees, and Medical Staffs. .Much more important than "joining" is developing formal collaborative agreements that build on existing relationships and serve the self interests of the community hospital and of the more complex institution or institutions in the larger city, preferably a teaching hospital. That was the original idea of the Hill-Burton Program of the l940's and 50's and of the Regional Medical Program of the 1960's and '70's. Much has changed since then, but there still is no need for the community hospital to give up its identity and to make its commitment to its community subservient to the larger hospital's basic interests. In general, the relationship will be better for both organizations if based on recognition of the greater value of interdependent, enlightened formal collaboration, reflecting mutual self-interest, rather than any other form of "joining". For more details, take a look t my web site "sigmondpapers.org" or telephone 215-561-5730.