Healthcare executives have reasons to believe digital health solutions will eventually pay off.
For healthcare leaders, investment in technology right now requires more than just resources—it also demands patience and willingness to trust the process.
As technology continues to evolve, so will organizations’ understanding of how it impacts the bottom line. For that reason, hospital CEOs must remain committed to investing in new technology for the long haul despite slow return on investment (ROI) out of the gate.
Decision-makers across the industry agree, according to Ernst & Young’s survey of over 100 payer and provider executives. While seven in 10 respondents (71%) said the implementation of new technologies hasn’t lowered hospital expenses, nearly all (96%) believe that the investment in new technology is worth the cost.
The sentiment is important for leaders in an industry that is typically slower to adopt and implement technology. Hospitals may not have to be at the forefront of new technology, but with financial and workforce challenges wreaking havoc at facilities across the country, many organizations can’t afford to fall behind the curve. And CEOs seem to understand that.
“In a very touchy-feely space like healthcare, or at least traditionally is, [technology] is sometimes foreign to us old heads,” Phil Wright, CEO of Memorial Regional Hospital South, told HealthLeaders.
“We're used to still touching patients and talking to patients and the more and more we create these solutions around AI and technology, it can be a little scary. On the flip side, all of this technology and innovation, if used properly, can do nothing but help the patient process, help us become more efficient, help us make better decisions about how we deliver care, help us be more precise and accurate in the types of medicines, the types of treatments that we're able to give. So I'm kind of excited about it.”
Measuring ROI
Leaders may not be seeing any ROI yet, but that doesn’t necessarily mean it’s not coming—or isn’t already here, even.
Ernst & Young’s survey found that 86% of respondents acknowledge the potential cost reduction from digital health investments, highlighting that many executives recognize that the value is there.
However, that value could be difficult to quantify, as half (50%) of respondents said the lack of ROI so far is influenced by “siloed tracking metrics.”
To keep up with technological advancements, organizations must improve and refine their approach to tracking to go beyond the traditional means. Switching to unified monitoring can allow hospitals to collect and analyze data in a more standardized way, leading to more informed decisions over what is and isn’t working.
Investment in technology is not as effective without the investment in solutions to properly track it.
Beyond the numbers
Arguably the best area CEOs can invest in right now, through technology or otherwise, is in their people.
Workforce continues to be the top priority for hospitals as shortages of clinical workers and burnout slow down operations.
By utilizing technology to supplement the workforce, leaders can do more with less while keeping staff happier. In Ernst & Young’s survey, nine out of 10 executives said that after shifting administrative responsibilities to a digital system, their department has more time to focus on the needs of their providers.
Solutions that reduce administrative burden and allow physicians and nurses to spend more time caring for their patients will pay off in the long run by cutting down on turnover.
“We want to make sure that the non-productive work or the administrative burden that is placed on our caregivers, we're removing that out into a centralized location, so our nurses don't have to be burdened with those administrative tasks,” Michael Charlton, CEO of AtlantiCare Health System, told HealthLeaders. “They should be at the bedside, they should be delivering exceptional care, providing compassionate care and empathy. But how do they maintain that? We feel that pulling that work outside and using tech to do that, that's really the next iteration.”
The returns on technology may not be fully realized yet, but as long as CEOs are thoughtful in how they invest, the results will eventually come, whether that’s reflected on the bottom line or on the understanding of what the future of healthcare is.
Surveyed leaders cited labor as the most pressing area of concern.
Above all else, hospital CEOs right now are worried about how they’re going to staff their organizations.
During a time when healthcare is susceptible to a talent drain among clinical and non-clinical employees, leaders are prioritizing addressing workforce shortages.
The American College of Healthcare Executives’ (ACHE) annual survey of hospital CEOs revealed that for the second consecutive year, workforce or personnel challenges ranked as the number one concern.
Workforce garnered an average score of 2.3 on an 11-point scale, finishing ahead of financial challenges, which ranked second for the third straight year at 2.6, and behavioral health/addiction issues, which ranked third at 5.3.
The survey fielded responses from 241 community hospital CEOs in the fall of 2023 to gauge what areas are top of mind for leaders and identify the specific concerns within each of those challenges.
Under workforce, here is how often the following issues were selected by CEOs:
Shortages of registered nurses: 86%
Burnout among non-physician staff: 79%
Shortages of physician specialists: 71%
Shortages of therapists (e.g. physical therapists, respiratory therapists): 68%
Shortages of primary care physicians: 65%
Shortages of advanced practice professionals: 32%
Managing remote staff: 27%
How CEOs can respond
Addressing these concerns requires a commitment from hospital leaders to both the people in their building and the next generation of clinical workers.
As more longstanding physicians and nurses especially get older and exit the profession, hospitals must find a way to develop talent to sustainably keep their organizations functioning.
“Longer-term solutions include strengthening the workforce pipeline through creative partnerships, such as those with colleges to grow the number of nurses and technicians,” Deborah J. Bowen, president and CEO of ACHE, said in the news release. “More immediate solutions include supporting and developing all staff, building staff resilience, organizing services to reflect the realities of the labor market and exploring alternative models of care.”
The shortage of workers is also exacerbated by burnout, which is harder to solve for without the ability to hire new staff. According to more than 200,00 physicians and more than 32,000 nurses surveyed by KLAS Arch Collaborative, improving staffing is the number one solution to addressing burnout.
However, CEOs can utilize the other methods respondents chose without having to hire more people, such as aligning leadership with physicians and nurses, providing better pay, and improving EHR efficiency.
What’s clear is that leaders will have to turn over every rock to counter workforce challenges that don’t appear to be going anywhere any time soon.
Solving for labor dynamics in 2024 requires keeping up with the current landscape.
Many of the workforce challenges hampering healthcare now are the same ones that have been around for years, but the circumstances around them continue to shift.
That is why CEOs at all organizations must closely follow how the solutions to these challenges evolve over time to stay ahead of the curve.
Here are three trends in workforce to monitor throughout the coming year:
Hospitals and health insurers have seen their plans to consolidate go awry after being under the microscope.
A flurry of healthcare transactions have been delayed or dissolved in the past few months, whether by regulatory or stakeholder pressure.
With financial headwinds influencing many organizations’ need to seek out partnerships, more dealmaking could beon the wayand with it, increased scrutiny from regulators.
According to the annual Hart-Scott-Rodino Report by the Federal Trade Commission and Department of Justice, the agencies cracked down at their highest level in two decades by filing 50 merger enforcement actions in 2022, representing the most actions since 2001 (55).
The health insurers mutually agreed to abandon their planned merger, which would have united them under HealthRight Group and created $6.8 billion in revenue to go with a membership base of 800,000.
SCAN Group CEO Sachin Jain told HealthLeaders in March of last year, four months after the move was announced, that the merger would allow the nonprofits to scale and take on their for-profit competitors.
However, following criticism from Oregon’s Medicaid Advisory Committee and politicians over the affect on taxpayer money and access to care, the organizations called it off.
The $2.5 billion sale between the payers was met with skepticism from state regulators, who raised concerns over the impact on competition, premiums, and proceeds.
A big sticking point in the deal was Blue Cross Blue Shield of Louisiana (BCBSLA) switching to a for-profit entity, even after BCBSLA proposed a new reorganization plan in December to give the state more oversight.
The organizations appear open to continue pursuing a merger, but it’s clear it will require jumping through several regulatory hoops to bring it to life.
Nearly six months after they signed an integration agreement to form a 25-hospital health system in the Midwest, the two sides mutually decided that “a combination at this time is not the right path forward.”
The only widely known regulatory scrutiny of the deal came from Minnesota Attorney General Keith Ellison, who said in October 2023 that his office would review the transaction’s compliance with state and federal antitrust laws.
It was the second instance of Marshfield Clinic pulling out of a potential merger in the past four-plus years, having previously withdrawn from a deal with Gundersen Health System to create a 13-hospital system.
In this case, the FTC stepped in with a motion to block the transaction that would have given John Muir Health full control of San Ramon Regional Medical Center.
A court ruling wasn’t necessary as the organizations chose to not challenge the agency and drop the deal, which then resulted in the FTC moving to dismiss the case.
Regulators argued that acquisition would have eliminated competition between the two sides in California’s I-680 corridor and led to higher prices.
New research reveals the continued financial decline of rural facilities.
The reality for rural hospitals across the country is dire and only getting worse.
Without policymakers taking action, little about the situation is going to change, David Schreiner, CEO of Dixon, Illinois-based Katherine Shaw Bethea (KSB) Hospital, told HealthLeaders.
Currently, 50% of rural hospitals are operating at a loss, up from 43% last year, according to a report by healthcare advisory firm Chartis. Since 2010, 167 rural hospitals have either closed or converted to a model that excludes inpatient care. Another 418 facilities are “vulnerable to closure,” the research highlighted.
“Unless something changes, the ability for tweener hospitals—what I call those hospitals between the critical access hospitals that are cost plus reimbursed and the academic medical centers—to be successful and to thrive in America is compromised,” Schreiner said.
The statistics are even more skewed for independent operators like KSB. Chartis found that 55% of independent rural hospitals are losing money, while 42% of health-system affiliated facilities are operating at a loss.
“Those margins are impacted for independent hospitals because we don't have the ability to allocate that over multiple locations,” Schreiner said. “And by that I'm talking about all of the centralized services like revenue cycle, HR, our electronic medical record, and the legal services. The list goes on and on and on. Systems have the ability to spread that. As a standalone independent hospital, we do not. So some of the things that worked in the past aren't working today and much of that is when we were involved in the pandemic.
“We have the war for talent that is never getting easier. Rural hospitals are becoming older, they're becoming less educated. And all of those make it more difficult for us to retain and recruit staff.”
There are strategies that rural hospital CEOs can implement to improve their finances, whether it’s addressing workforce challenges or exploring new revenue streams, but without long-term stability, it can feel a lot like running in place.
“Even if we do things very well and we operate as efficiently as we can, we may be able to get to a break-even margin,” Schreiner said.
“The real threat for us is our inability to capitalize. So even though we may do okay on the bottom line, we're not putting off enough of the profit in order to buy new equipment and reinvest in our facilities.”
What changes will make enough of a difference? One option, Schreiner noted, is to increase the size of the cost plus reimbursement for rural hospitals, similar to what it is for critical access hospitals. However, critical access hospitals qualify if they have 25 beds or less, whereas a rural hospital like KSB has 80.
“What should that number be? Should it be 50? Should it be 75? That would have a dramatic impact on the sustainability of hospitals,” Schreiner said.
Another option, he suggested, is to redefine sole community hospitals. Right now, part of CMS’ criteria for a sole community hospital is if it is located more than 35 miles from other like hospitals. The distances for hospitals beyond 35 miles can vary greatly, however, and that can impact the survival of those operators, as well as the communities they serve.
“There's a much different definition of rural if you're in Northwest Illinois, like we are, versus being in the plain states, for example, where you may be a two-hour drive away from the next facility,” Schreiner said.
“Our communities rely to a great deal on a thriving community hospital. We're often the largest employer in the community, the economic driver of the community in a very big way. So when communities lose their hospitals like you've seen in places like Streator, Illinois and Fort Scott, Kansas, you can see what happens to those communities within one year, two years, three years after the closing and it's detrimental.”
Surveyed clinical staff provided their solutions to keep the workforce strong.
Hospital CEOs take note: Physicians and nurses largely agree on the top ways leadership can reduce burnout.
As burnout continues to weaken the workforce at hospitals across the country, CEOs must take action to create a sustainable environment for their employees.
According to more than 20,000 physicians and more than 32,000 nurses surveyed for a KLAS Arch Collaborative report, improving staffing and aligning leadership with staff were the number one and number two solutions, respectively, for addressing burnout.
Here’s a look at the top six methods chosen by respondents:
Improve Staffing
The clear choice for both nurses and physicians, it’s no surprise that staffing should be a priority for CEOs.
Not only do hospital leaders have to be willing to add to their workforce, but they also must think of ways to bolster recruitment and hiring strategies.
The hiring process especially shouldn’t be overlooked, according to Memorial Regional Hospital South CEO Phil Wright, who advises having efficiency and cultural fit in mind when bringing on new staff.
Align leadership with physicians and nurses
Respondents also share the belief that leadership needs to better support staff.
To do that, CEOs should strive to create an environment where their physicians and nurses feel like they are heard and cared for. Concerns falling on deaf ears is a surefire way to alienate workers and have them considering walking out the door.
Provide better pay
Not everything can be solved with money, but increasing pay can go a long way to making staff—nurses in particular—feel like they are properly compensated for their work.
Even though CEOs everywhere are aiming to cut down on labor costs, investing in your people can help reduce turnover, which will save on the bottom line in the long run.
That’s why 70% of hospitals have implemented or increased sign-on bonuses in the past year, while 59% increased new hire pay, 54% increased their minimum wage scales, and 52% increased or added referral bonus programs, according to a recent survey by Aon.
Improve EHR efficiency
Many physicians and some nurses report that they are doing more with fewer resources due to their experiences with EHR.
To improve efficiency, CEOs should consider providing EHR education and personalization tools to optimize workflows, as well as exploring partnerships with vendor and service firms.
Decrease workload
Bringing in enough staff to handle the workload is necessary, but it’s not addressing the root of the problem: reducing the amount of work.
That’s something AtlantiCare Health System CEO Michael Charlton believes is a must for hospital leaders to truly address workforce challenges.
Part of the solution may lie in technology and its ability to automate tasks that would otherwise be done manually. However, it requires CEOs be proactive by investing in and implementing technology to take the burden off their staff.
Provide better wellness benefits
Going back to the idea of leaders investing in their workers, simply increasing pay is not necessarily enough.
Physicians and nurses want better benefits to feel like they are rewarded outside of how they’re compensated.
In response, many hospitals have stepped up their benefits. The aforementioned survey by Aon found that 95% of hospitals are offering tuition reimbursement programs, 93% are offering flexible work options, 84% are offering personal leave, 80% are offering financial/wellness planning, 64% are offering gender-affirming benefits, 57% are offering enhanced behavioral health benefits, and 53% are offering paid parental leave beyond state and city mandates.
Understanding what it is that their clinical staff want can allow CEOs to implement the right changes to keep their workers happy and in place for the long haul.
The leaders of the organizations shared what to expect from the eyebrow-raising venture.
The healthcare industry seems equal parts skeptical and intrigued by the purchase of Summa Health by General Catalyst’s HATCo.
For Summa Health CEO Cliff Deveny and HATCo CEO Marc Harrison, the acquisition is an opportunity to push the boundaries of how a health system can deliver care through technology.
Those on the outside looking in undoubtedly have questions about exactly how the organizations hope to achieve their vision.
See what Deveny and Harrison had to say in the recent exclusive interview with HealthLeaders below.
Mounting scrutiny was too much to overcome for the organizations’ partnership.
SCAN Group and CareOregon have abandoned their plans to combine in the face of regulatory pressure and outside criticism.
The proposed merger, which the health insurers announced in December 2022, was intended to unite the two nonprofits under the HealthRight Group to strengthen their position against their for-profit competitors. Instead, the move failed to meet the expected close date of December 2023 and was greeted with skepticism, leading to the organizations mutually agreeing to call it off.
"SCAN and CareOregon share a commitment to preserving and protecting nonprofit, locally based healthcare and that has always been our goal in combining under the HealthRight Group,” SCAN Group and CareOregon said in a joint statement. “Our intent in coming together was to support Oregon's healthcare system and the people that CareOregon serves. However, despite our efforts, there are still questions about our combination."
HealthRight Group would have had $6.8 in revenue and nearly 800,000 members, bringing together SCAN Group’s 285,000 Medicare Advantage (MA) members across Arizona, California, Nevada, and Texas with CareOregon’s 500,000 members in Medicaid and MA plans.
Oregon’s Medicaid Advisory Committee this past December recommended that the Oregon Health Authority disapprove of the merger, citing “flow of taxpayer dollars leaving the state and the potential loss of local control of CareOregon’s affiliated CCOs.” Additionally, the committee argued that the partnership had the potential to reduce access to care, negatively impact the ability to address health inequities, and take away financial resources from local communities.
Multiple politicians, including former Oregon governor John Kitzhaber, joined in on opposing the merger, further putting pressure on the organizations to nix the deal.
"The argument is that Oregon CCOs must choose the lesser of two evils — merging with a multi-state, multi-billion-dollar Medicare Advantage company like SCAN, or being purchased by an even bigger for-profit insurance company such as UnitedHealthcare. This is a false choice,” Kitzhaber wrote in a blog post.
In an exclusive interview with HealthLeaders in March of last year, SCAN Group CEO Sachin Jain spoke on the necessity of nonprofits scaling to compete with for-profits.
"These are two renowned not-for-profits coming together as a viable alternative to for-profit plans in the government space … We want to be able to scale to meet challenges at the level of for-profits and private equity organizations,” Jain said.
Pushback on the merger and its ultimate withdrawal may also have been somewhat influenced by the industry’s cooling on MA. Between the government cutting benchmark payments by 0.2% and the introduction of new reimbursement rates, the private program could be much less profitable than payers have become accustomed to.
Efforts to improve pay and benefits, talent development, and worker safety have been effective.
A multipronged approach to addressing the workforce has allowed Pennsylvania hospitals to reduce turnover for direct care positions by an average of 28% over the past year.
The results were driven by strategies to attract, develop, and protect workers, according to a report by the Hospital and Healthsystem Association of Pennsylvania (HAP), which surveyed 99 hospitals in the state from October 17 to November 27, 2023.
While staff turnover has improved from pandemic levels, Pennsylvania’s hospitals continue to deal with high average vacancy rates, such as 19% for nursing support staff and 14% for registered nurses.
Here are three areas where Pennsylvania hospitals have focused their efforts to strengthen the workforce:
Compensation and benefits
To improve recruitment and retention, surveyed hospitals are investing in their staff by bolstering pay and benefits.
Since 2022, nearly all facilities report implementing increases in base compensation (97%), flex work schedules (95%), and professional development/tuition reimbursement (89%). Many others have instituted sign-on, schedule/shift-based, and/or referral bonuses (56%), retention bonuses (49%), and provision of children services (39%).
Other reported strategies include performance rewards, paid parental leave, and student loan repayment.
This is consistent with a nationwide trend of hospitals upping their incentives to attract and keep talent. According to a recent survey by Aon, 70% of hospitals implemented or increased sign-on bonuses in the past year, while 59% raised new hire pay, 54% upped their minimum wage scale, and 52% increased or added referral bonus programs.
Workforce development
Pennsylvania hospitals are also investing in the next generation of workers to create a pipeline of talent.
Working with schools is one of the primary strategies, which includes partnerships with four-year colleges/universities (99%), community colleges (99%), and high schools (92%).
Partnerships are also reaching trade/technical schools and/or community organizations for more than half of hospitals (55%) and middle schools for a quarter of respondents (25%).
Developing new talent is crucial as more and more experienced workers leave the field. According to 82% of respondents, finding qualified individuals is one of their top three barriers to employing staff.
Workplace safety
One of the factors spurring turnover at hospitals is workplace violence, which must be an area of emphasis for leaders to keep their staff safe.
To address rising violence targeting professionals, almost all Pennsylvania hospitals have implemented staff education on safety protocols (97%), enhanced security measures (95%), de-escalation training (95%), and promotion of respectful behavior (93%).
Meanwhile, most hospitals are using no-tolerance notices (76%) and metal detectors/artificial intelligence (61%).
Keeping workers safe is one of several ways hospitals can support their staff, increasing the likelihood of employees wanting to stay in their role and organization.
David Schreiner shares strategies for other leaders in rural settings trying to keep their doors open.
CEOs of rural hospitals are dealing with their own unique set of challenges for remaining financially viable.
To have and sustain success right now as a rural facility, leaders must be willing to be more proactive than reactive, says David Schreiner, CEO of Dixon, Illinois-based Katherine Shaw Bethea Hospital.
Not every strategy will work, but Schreiner believes in fighting to keep rural hospitals locally owned because of the impact on quality of care.
Below, Schreiner gives three simple tips to fellow rural hospital CEOs for staying up and running for the long haul:
