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The Single Greatest Hospital Success Indicator

Analysis  |  By Philip Betbeze  
   November 09, 2017

Is your hospital part of a health system? A turnaround and consulting firm's data suggest much of your organization's success can depend on just that one factor.

But it's rapidly becoming less so. Since I wrote this column years ago, the pressures on standalones have only increased.

Hospitals that are part of a system do far better financially than their counterparts.

"Over the past two years, we've noticed that the single greatest indicator of success for hospitals is whether or not they're part of a multi-hospital system," says Scott Phillips, managing director of Healthcare Management Partners, a Nashville-based turnaround and consulting firm that focuses on hospitals that are experiencing financial challenges and is led by experienced former C-level
executives such as Phillips.

"Just that one factor provides a bottom-line advantage of four to nine percentage points [in profitability], which is almost insurmountable."

Means to an End

Not that financial success is the overarching goal of healthcare—especially in nonprofit or government-owned healthcare, which still makes up 78.7% of hospital systems, according to Kaiser Family Foundation. But as I've heard countless CEOs say, "no margin, no mission."

As a standalone hospital, you're distressed almost by definition, Phillips says.

The firm's data, based on Healthcare Cost Report Information System (HCRIS) data from more than 200,000 Medicare Cost Reports filed by hospitals, nursing homes, home health agencies, and other providers since 1994, supports this contention overwhelmingly. Standalone hospitals still represent roughly a third of hospitals and 30% of the beds, but they tend to be small, and are disproportionately government- or health district–owned.


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Philip Betbeze is the senior leadership editor at HealthLeaders.

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