REYNOLDS & COMPANYCustomizing Strategic and Financial Solutions

This graphic lays out six major kinds of opportunities and 35 related strategic/financial initiatives from which a hospital can assemble a cohesive strategy that simultaneously improves financial performance and market positioning. In fact, one of our clients recently targeted and achieved more than $10 million of financial improvements by adapting several of these initiatives to his hospital and marketplace.

Growing The Hospital’s Top And Bottom Lines

REYNOLDS & COMPANYCustomizing Strategic and Financial Solutions

GROWING THE TOP AND BOTTOM LINESImprovements In Financial Performance And Market Positioning Depend On

Which Strategic Initiatives From Among Six Kinds Of Opportunities Are Pursued

1. Maintain the scale of your primary care physician network as physicians retire

2. Assure that your high margin product lines, such as open heart surgery, are differentiated as other providers target these niches

3. Protect the perimeter of your marketplace from competitive incursions by primary care physicians aligned with competing hospitals

4. Protect referrals to your specialists that are coming from primary care physicians and institutional referrers outside your local market area

PROTECTCURRENT VOLUME

1. Add primary care physicians to your active medical staff in undersupplied or poorly served locations that will draw new patients

2. Increase specialty referrals to your active physicians

3. Negotiate MCO or direct contracts that gain access to MCO-covered lives not now available

4. Partner with physicians on business ventures that increase diagnostic and therapeutic volumes and revenues for both the physicians and hospital

5. Encourage primary care physicians on your medical staff to join provider panels of targeted HMOs

6. Extend existing products and services into adjacent markets

GROWADDITIONAL VOLUME

1. Reduce unit cost per case by standardizing and decreasing resource consumption within quality benchmarks

2. Increase labor productivity by benchmarking customer service standards

3. Consider limited gain sharing arrangements that link physician bonuses to verifiable cost savings which can be assessed in relation to the quality of care

4. Install information systems and connectivity that support the management of clinical quality and cost per case

5. Reduce corporate overhead costs while maintaining support to line managers

6. Restructure those pieces of the care continuum that are strategically important but producing losses

7. Dispose of losing pieces of the continuum in ways that assure continuing referrals of customers

REDUCEUNIT COSTS

1. Increase selected charges that maximize net revenue

2. Assure that all services rendered are posted to patient accounts and billed

3. Maximize Medicare reimbursement and minimize associated LOS and resource consumption

4. Reconsider charity and bad debt policies to improve margins

5. Improve collections to net more revenue

6. Renegotiate HMO contracts in which you have leverage to improve payment policies and increase rates

7. Manage payor denials proactively

8. Audit HMO receipts to assure full payment against contract terms

INCREASE UNIT NET REVENUES

1. Launch new products or services that complement or round out current offerings:

Clinical Diagnostic Therapeutic Post-acute

2. Pursue joint venture partnerships with your specialty physicians that target profitable franchises for subspecialty services

3. Get into complementary and alternative medicine in ways that do not alienate your medical staff

4. Launch e-commerce ventures that establish your web site as the focal point for information, services and transactions that serve consumers and your aligned physicians

CREATE NEW BUSINESSES

1. Use care management methods to further reduce length of stay to free up bed days and cut cost per case

2. Increase throughput in ED, OR and diagnostic/therapeutic services to reduce length of stay, increase available capacity and reduce unit cost

3. Identify ways to minimize unreimbursed readmissions within 31 days that may also be quality outliers

4. Create observation beds to free-up med/surg beds

5. Move lower margin cases to beds in lower cost settings

6. Shift the allocation of bed capacity away from low/negative margin cases toward high margin subspecialty cases

MAXIMIZE AVAILABLE REVENUE CAPACITY