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4 Key Strategies for Successful Nonprofit Health Systems

News  |  By Philip Betbeze  
   May 18, 2018

A report suggests nonprofit health systems will need to expand patient access, master digital efficiencies, recruit top talent, and maintain financial flexibility in order to thrive in the future.

High-margin inpatient services will represent less of a nonprofit health system's future success profile, and their leaders will need to adapt to that changing reality by modifying their long-term strategic focus.

So says a report from Moody's Investors Service that reinforces the notion that future success will come more from outpatient services as more procedures migrate from the high-margin inpatient space upon which hospital leaders have historically depended for financial success.

Top 5 Differences Between NFPs, For-Profit Hospitals

The report highlights four key strategies that will be effective as healthcare procedures continue their outpatient migration.

  1. Invest in access. Hospitals will need to balance investments in access points with maintaining high-margin inpatient services, the report says. While outpatient facilities are an efficient way of treating lower severity cases in a cost-effective setting, margins are generally weaker than for inpatient services. Still, hospitals will need to cannibalize their own inpatient business to a degree instead of fighting this clear trend, as the supply of inpatient beds will decline as hospital space accommodates mainly higher acuity cases.
  2. Digitalization will be critical. Investment in electronic medical records will morph into using the data contained in the EHR toward improving efficiencies and clinical outcomes, and spurring innovation, while protecting data through cybersecurity. However, electronic medical record implementations will continue to impose financial risk through expensive installation costs, temporary disruption to patient services and operations, and the risk of receivables write-offs. Nevertheless, hospitals will rely on sophisticated data analytics working in tandem with the EHR to manage care and costs and to ultimately predict healthcare needs.
  3. Build your talent. Investment in talent will represent a growing portion of operating costs, particularly if the nursing and physician shortage continues, the report says. With a limited supply and rising cost of nurses and physicians, it will be critical for nonprofit health systems to drive toward improving productivity and redesigning workflows. One strategy for mitigating increasing talent costs will be the degree to which health systems are able to integrate telehealth as a cost-effective means of delivering care, and improving access and throughput, as opposed to staffing physicians 24/7, or paying on-call wages.
  4. Be able to adjust between growth and contraction. Operational and funding flexibility in a changing healthcare environment, and ability to grow and contract, will be crucial to overall credit quality, Moody's says. Hospitals will need to remain flexible in deploying capital and adapting strategies as the healthcare landscape changes. Those with healthy liquidity will be better able to manage volatility and adapt to changing markets.

Philip Betbeze is the senior leadership editor at HealthLeaders.

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