3 Ways Hospital CEOs Strive for Financial Stewardship

Leaders have little choice but to pursue strategies to shore up the short- and long-term financial health of their organizations.

Current headwinds and market volatility are creating a particularly challenging financial environment for hospital and health system CEOs to operate within. Between rising labor costs and uncertain reimbursement rates, it’s crucial for organizations to be efficient with their resources.

Leaders must prioritize their spending and allocate funds to where they are most needed to ensure strong portfolio management.

Here are three areas that hospital CEOs can target to improve their financial stewardship.

Achieve growth

Growing your organization is easier said than done when margins are tight, but it doesn't have to feel impossible.

One area CEOs should assess is what service lines are worth expanding on to reach the most patients possible.

For example, Penn State Health achieved this through its affiliation with Lancaster Orthopedic Group, announced in February, which allowed the health systems to grow its orthopedic services in the region.

The physician owned and operated practice includes a staff of 18 orthopedic physicians and 15 advanced practice providers.

Penn State Health interim CEO Deborah Addo recently told HealthLeaders about the affiliation: "It's that kind of growth on the other side that says how do you continue to do the work that you need to do and how do you become the organization of preference, top of mind? We need to make sure that we also are good stewards in the community, but that we are a top-of-mind choice for those who may be thinking of a landing place."

Create additional revenue streams

Similarly, joint ventures or a vendor partnership can provide organizations with win-win opportunities to turn loss leaders into profitable strategies.

Outpatient care is an especially worthwhile investment right now due to its lower overhead and ability to meet the shifting demand for services.

Inspira Health bolstered its outpatient offerings through its joint venture with Atlantic Medical Imaging and Regional Diagnostic Imaging to enhance its outpatient imaging experience for patients.

On the vendor side, Inspira struck an agreement with Labcorp in January to manage its daily operations of hospital labs and serve as the primary lab for the health system's physician network.

Inspira Health CEO and president Amy Mansue recently told HealthLeaders about the importance of "not being afraid to look at some of those areas within your own shop and say, 'OK, I'm not doing this well, is there something else I can do better?' Or you may have an existing relationship that may just not be meeting your needs anymore."

Reduce expenses

Cutting costs can be a painful process for leaders, but it's often necessary for long-term sustainability and the health of the bottom line.

Expenses related to the workforce are a primary target for hospitals right now, with many organizations resorting to layoffs and restructuring of leadership.

However, reducing staffed positions doesn't have to be the go-to strategy to alleviate costs. Instead, hospital CEOs can choose to continue paring down reliance on contract labor by improving worker retention through initiatives that cut down on burnout and improve wellbeing.

Investment in technology that creates more efficiency and further alleviates the administrative burden on clinicals, such as ambient listening and note-taking generative AI tools, can also strengthen the workforce without sacrificing care.