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What Drives Your Success? Maybe Not What You Think

Philip Betbeze, for HealthLeaders Media, August 17, 2012

If you lead a healthcare organization that's constantly touted as one of the highest quality or most innovative health systems in the nation, congratulations. Just make sure you're not fooling yourself about why that's the case, says Nate Kaufman, managing director of Kaufman Strategic Advisors, in San Diego.

Kaufman, who provides tactical and strategic advice to many of those very same systems, is counseling his clients about misattributing the underlying reason for their success to patient care or innovation. Rather, he suggests, success comes directly from the fact that they are currently able, through their market dominance, to leverage much higher rates of reimbursement than other institutions.

"The reason they're better is they're able to charge more than others," he says.

And that can't continue, he argues.

"It's funny when politicians hold out certain health systems as the model of the future only to find out later that they're getting reimbursed at level that's 60% more than the average hospital," he says. "I don't think that's universally known."

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1 comments on "What Drives Your Success? Maybe Not What You Think"


Dr. Rob (8/21/2012 at 2:00 PM)
"That's why Kaufman says that if you aren't getting substantially higher commercial rates than your competitors right now, it's time to start thinking about a merger, or at the very least a precursor to a merger that helps your finances survive a big hit to reimbursements. All the higher current commercial rates buy you is some indeterminate amount of time." I do not follow the logic. You are recommending facilities to cost shift to HMO's, or until the Stae and Federal enrolled members bleed them dry. You are essentially adding another unfair burder on the working class and those who can afford healthcare coverage - essentially another "tax" to subsidize the care rendered in Federal/State programs? How will this sustain "quality healthcare for all"? It won't. IT would be more prudent to reduce the current services offered, or cost shift to the current enrolled members of Medicare and Medicaid? When the money runs out of these programs, further reductions will need to be realized, or further co-payments by these members will need to be implemented in the Federal/State programs. It is only a matter of time until this happens. Current levels of spending in Medicare and Medicaid are NOT sustainable. Current levels of reimbursement have never been close to actual costs. Members are receiving "Mercedes" care on "Model-T Ford" budgets.