STRATEGIC AGILITY SERIES, REPORT 2 SPONSORED BY GE CAPITAL
It’s never easy for hospital and health system leaders to balance
short – term revenue challenges against investments that will
meet future needs for clinical technology and equipment.
Information management systems, and bricks and mortar.
Yet this task has taken on even greater levels of dif&ciiltyâ€”and
importanceâ€”as of late.
Many long-held assumptions about ways to optimize organizational resources are being cast aside as the industry pushes
to improve value in healthcare delivery, striving to provide
high-quality care at low cost. Shifts in payment models, service
demand, and market competition are radically changing the
landscape, creating a dynamic environment in which organizations must assess strengths and vulnerabilities.
During this time of change, healthcare leaders need to anticipate
and set in motion tactics and processes that wÃ¼l not only mitigate
economic pressures on revenue in the current fee-for-service
enviromnent, but also prepare for the healthcare world Ã±ve years
from nowâ€”one that is likely to be focused largely on outcomes
and capitated approaches toward delivery.
Strategic agÃ¼ity, or readiness to meet the demands of tomorrow,
wÃ¼l require forming creative partnerships; making progressive
investments in systems, technology, and facilities; and developing and managing novel healthcare delivery networks.’ How
well leaders are able to optimize the organization’s assets wÃ¼l
play a key role in having not only the resources to take part in
these value – driving efforts but also the confidence to know the
organization won’t become so overburdened with obligations
as to impede nimbleness and competitiveness.
Significance of Asset Management
Imprudent asset investment imposes a heavy toU on agility. When
an organization faus to optimize assetsâ€”signing a $100,000
contract for equipment that is used in fewer than lOO procedures
a year, for exampleâ€”it not only experiences poor ROI, but it also
becomes less able to devote resources where greater value can be
derived. Similarly, although ownership traditionally has been a
key strategy used to maximize the useful life of assets, it needs
to be pursued with much greater diligence these days given its
potential to hold the organization back from obtaining nextgeneration capabilities or efficiencies or from redeploying assets
to address changes to patient mix, payment, or service demand.
How effectively an organization manages its assets is of particular
concern in today’s dynamic environment as threats of underutilization have become particularly frequent. Heightened
merger and acquisition activity can quickly leave an organization with replicated equipment, technology that isn’t well suited
for integration, or facilities in service areas that are suddenly
oversaturated with similar providers. Many hospitals are learning the hard way that revenue-producing areas today can easily
become cost centers tomorrow.
To react quickly in the face of fluid local and industrywide
healthcare trends and operate with greatest efficiency, providers
need to be able to reevaluate their present fleet of technology,
equipment, and real estate assets and analyze for value; What is
the cost of owning or operating each asset? Is it used enough?
Is it deployed in the right place, used at the right time, targeted
for the right patient populations? Are organizational resources
being used in the most effective way to support the long-term,
strategic objectives ofthe organization? How might demand
relating to use of the asset change in the future, and how wiU
the organization likely respond?
As providers look to support strategic aguity through optimal
asset management, four critical actions will be necessary;
â€¢ Aligning changes in long-term strategy with asset deployment
â€¢ Staying vigilant to external influences on asset value
â€¢ Reexamining asset capabilities to support integration
Â« Redistributing organizational resources to support growing
The following examples demonstrate how progressive organizations are meeting and addressing shifting asset needs in each of
Aligning Changes in Long-Term
Strategy with Asset Deployment
Peoria-based OSF Healthcare, one ofthe largest integrated
healthcare systems in Illinois, is transforming the way it
delivers careâ€”and adjusting its approach to managing its
Rather than continue as a community-hospital-based organization that follows an episode-of-care delivery model, OSF
is becoming a longitudinal system that delivers healthcare
services at a variety of sites across large geographic areas.
Regional-level CEOs at the organization are examining costs,
care delivery practices, and asset deployment to address this
change in vision. Managing investments in imaging equipment
and services has been one area where leaders have made particular strides. “In the past, our individual hospitals often were
competing against each other for volume for certain imaging
services,” says Dan Noeth, executive director of sourcing and
contract administration. “If one hospital or outpatient center
attempted to gain additional volume, then it frequently cannibalized volume from another OSF facility ftve to 4,5 nules
away. Also, the investments rarely achieved organizational
synergy to best serve patients in terms of leveraging staff,
sharing best practices, and optimizing technological capabÃ±ity.”
The new regional focus has led OSF Healthcare to create optimization and strategic road maps for high- end technology, such
as computed tomography (CT), magnetic resonance imaging,
nuclear medicine, and mammography.
2 August 2013 Â© 2013 Heaithcare Financial ManagemenI Association hlina.or9
As Noeth explains, OSF began with the assumption that go percent of the cost of large imaging equipment involves lease cost
or depreciation, labor, and maintenance. Leaders then calculated
the cost per procedure performed with each piece of equipment
and categorized imaging units on the basis of cost, clinical
capability, and safety, with the core objective of determining
whether an OSF region was utÃ¼izÃ¼ig imaging equipment effectively and efficiently.
Common questions asked as part of this effort included: Do
volumes support the current installed base of imaging machines?
Which units are highest in cost? Can machines be redeployed to
maximize volumes and/or patient care? Can imaging units he
closed without adversely affecting patient care? How many
machines are clinically obsolete? How many machines can be
replaced with newer, safer technolog)’without increasing costs?
“We found we didn’t need aU of our imaging units,” Noeth says.
“In CT, we were able to shut down three units, and we were able
to acquire or upgrade CT units with low- dose capabilily while
actually reducing our costs. In three years, we lowered our cost
for CT from $13.5 million to just a little over $10 million.”
The organization’s cost range, which was $60 to more than
$1.000 perprocedure in 2010, went to $48 to $250 in 2012, he
says, whue procedure volume went up 3 percent.
Patients also benefited, as the organization increased the number of patients being serviced on low-dose capable machines.
“We went from 17 percent to 91 percent of patients being
scanned with low- dose capable units, resulting in a 400 percent
increase in our use of low- dose technology,” Noeth says.
OSF has applied the same method of asset review across other
imaging modalities, most recently in mammography. Noeth
notes that the organization is shutting down five of its ?6 units
and upgrading 80 percent of the fleet to tomosynthesis capabÃ¼ity. “We wÃ¼l have one of the largest breast tomosynthesis fleets
in the country. Our radiologists wul use 3-D capability to find
much smaller lesions sooner, supporting less invasive treatment with better outcomes,” he says. “We also wÃ¼l reduce our
operating cost by ahout 20 percent whue reducing the number
of false positive studies.”
As part of its regional model of healthcare delivery, OSF is
continually exploring demographic density and procedure
volume across the system. OSF also has engaged external expertise to help support its anal3^ic efforts, including equipment
suppliers, a group purchasing organization, radiology group
leaders, and a nationally recognized healthcare finance consulting firm with expertise in optimizing equipment management.
This team’s supplemental data and insight are helping OSF to
determine optimal clinical, operational, and financial value.
With population data and demand forecasting, OSF has been
able to make more rational decisions about the niimber, location,
and technology level of its imaging services. “Some of our
locations, such as Escanaba, Mich., and Pontiac, 111., can support
only one tomosynthesis machine, as opposed to their previous
two mammography units. In larger regions, not all units
required tomosynthesis capability. No region was identified as
needing additional capacity, although some units required
relocation to achieve optimal asset utilization,” Noeth says.
After OSF retires its units that aren’t required, it will stÃ¼l have
ABOUT THE STRATEGIC AGILITY SERIES
In the face of downward payment pressure and payment
structures that reward efficiency and quality, healthcare
organizations recognize the need to transform their organi –
zations to deliver valueâ€”high quality at low cost. Carrying out
this strategy will involve an array of activities, from integrating with physicians to implementing electronic health
records to using formal process improvement to drive out
waste to pursuing collaborations with other organizations.
Financing the value strategy is a formidable challenge. Not
only are the components of this strategy expensive, hut for
many hospitals, payment and volume pressure means that
they are challenged to provide funding through cash from
operations and may need to access capital through bonds
and other traditional sources. This is especially true for the
“have-not” organizationsâ€”hospitals that are financially
challenged because of factors such as payer mix or location.
As hospitals and health systems navigate shifting patient
volumes, new payment models, and the uncertain competitive landscape ahead, those organizations hest positioned for
success wiU be able to demonstrate “strategic agility.” Rapid
response to shifting market dynamics requires preparedness in both capital planning and management. Specifically,
leaders should focus on:
â€¢ Heeding the call for strategic agÃ¼ity
â€¢ Optimizing asset management for strategic agÃ¼ity
â€¢ Maintaining financial flexibÃ¼ity for strategic agility
â€¢ Managing productivity for strategic agility
This report is the second in a series of reports from
HFMA, with sponsorship from GE Capital, that wÃ¼l explore
each of these important endeavors. To view prior reports
and stay abreast of latest offerings in the series, see
HFMA EDUCATIONAL REPORT 3
STRATEGIC AGILITY SERIES, REPORT 2 SPONSORED BY GE CAPITAL
capacity to increase its regional procedural volume by 2,0 percent
Taking part in this review is a multidisciplinary group that
includes the organization’s medical imaging leaders and staff,
radiologists, radiology group leaders, supplier representatives,
and OSF staff from finance, revenue cycle, marketing, contract
administration, and women’s health. This mix has been important not only to gain operational, clinical, and financial
perspective but also to drive buy-in across the enterprise to
implement the data-driven recommendations.
Procedure and cost data are making it clear to stakeholders why
cost per procedure analytics are essential in today’s challenging
healthcare environment, Noeth says.
Of course, knowingwhether demand can support a service is
just one consideration. Even when organizations recognize the
need to provide access to services, they also should examine
which strategies will be cost-effective and provide low-level risk
should utilization, usefulness of technology, or payment change.
At East Texas Medical Center, in rural east Texas, for example, an
ownership change suddenly brought 15 hospitals into a network
of healthcare providers. Leaders used leasing on a fee-for-scan
basis as a low- risk way to bring MRI services equivalent to those
offered at a larger hospital to the small, rural setting.
With a hub and spoke approach, leased mobue scanning
equipment serves a series of hospitals as small as 25 beds that
surround the Tyler facility within a 50 mile radius. The payment
arrangement incents the equipment vendor to garner physician
huy- in and help market the imaging services. As one executive
at the medical center put it succinctly, “If we don’t get patients,
they don’t get paid.”^
By forgoing equipment purchase of an MRI at a stationary
facility, the organization not only has found a cost-effective
way to provide services to areas without enough utilization to
support the investment, but it also positions itself to be more
responsive should utilization patterns change as the network
continues to mature under its new ownership structure.
Staying Vigilant to External Influences
on Asset Value
Reevaluating the role of assets within the organization is just
one component of strengthening organizational aguity. Also
important is keeping abreast of potential opportunities beyond
the organization’s walls to enhance asset value.
Market viguance has helped New Orleans-based Ochsner
Health System get the most from its investment and use in
real estate during recent years. Ochsner has been pursuing
a bold plan for growth and progressive, integrated care
delivery that will expand its footprint and create a regional
interconnected system of care to serve patients and promote
community Wellness by means of alliances with community
hospitals and physicians.
“We’ve always heen a big user and owner of property,” says
Jason Ruggles, director of corporate real estate. “But now we
also are looking at other arrangements in real estate as a
valuable tool to accomplisb our healthcare goals.”
One example can be seen in Ochsner’s acquisition of many
campus-adjacent single-famuy homes, some ofwhichwere
abandoned after Hurricane Katrina. “Although the investment
is outside of our core business, we have been able to turn those
residences into a pretty successful operation to house our
medical students, residents, and fellows,” says Ruggles. “Over
the long term, the properties will give us the opportunity to
expand our footprint.”
Also, although Ochsner primarily has owned and operated its
properties in the past, it now has a variety of real estate partnerships. “We have become so spread out that we’re looking at
relationships more strategically and saying, ‘OK, how does each
individual location benefit our ultimate goal of patient care, and
what kind of partnership relationship is best,'” Ruggles says.
The nature of the real estate relationship depends on the
capacity and service needs of each locale. With such a large
presenceâ€”Ochsner employs 840 physicians and has developed
relationships with 1,4,00 community physiciansâ€”the executives
at the system level do not have the benefit of day-to-day interaction with physician partners and the local community. So
Ochsner relies on the COOs and CEOs in its regions to make
many of the decisions on how its real estate assets can generate
the most value. “We Kke them to ftgure out strategically what
kind of relationship makes sense for the physicians and the
use of their hospital,” says Bui Ward, senior vice president of
facilities, real estate, and support services.
The desired strategy often can mean the purchase of medical
office buildings, a lease arrangement, or a tenant partnership.
Purchase is less preferred these days, however.
“We are not going to be in the business of buying bricks
and mortar or acquiring a lot of physician practices,” Ward
says. “We arc looking at affiliations so we can offer a suite of
complementary services that give physicians and hospitals
the independence to do well. Rather than simply conducting a
real estate deal, we are looking at arrangements that make sense
for health care, for Ochsner, and for us to be able to provide
better and higher quality care.”
In the same spirit, Ochsner is examining existing relationships
with tenants to determine whether the facilities can be put to
better use. Looking at the best way to make use of real estate
assets wiU be important to ensuring the organization can provide
appropriate access and service mix as market forces change.
4 August 2013 Â© 2013 Healthcare Financial Managemenl Association hfma.org
One example has been the organization’s focus on improving
primary care access. “With healthcare reform, we know we
should be expecting additional focus on Wellness and chronic
care management in lower intensity settings,” Ward says.
Anticipating increased use of outpatient services and these
changes in delivery models, the health system is in the process
of converting two warehouse -luce facilities into an internal
medicine complex. The properties were acquired 15 to 30 years
ago and rented out over time to a national food chain and a
multipurpose retailer. In the past two years, Ochsner has transformed one of the buildings into a covered parking garage, and
it is transforming the other into 150,000 square feet of internal
medicine/primary care, academic, and other medical space.
Ochsner also is constructing a bridge over a four-lane state
highway to cormect the new facility to tbe main campus to make
it easier for patients to access services. “We are essentially
doubling our capacity to offer primary care,” Ward says.
Redeploying Assets to Support Integration
Another common consideration for optimizing asset use going
forward is adequately planning for data sharing across different
settings of care. As the industry seeks to reduce costs through
better management of population health, providers will likely
assume much greater risk and require far better understanding
of quality and cost drivers throughout tbe patient encounter. In
addition, organizations should be looking to systems that will
help support accountability for care outcomes spread across tbe
As such, investing in tbe right IT goirrg forward involves not only
doing what’s needed for desired efficiencies and intelligence
within tbe organization but also doing it in a way that makes
sense for broader organizational strategies around integration.
One organization takingthis approach to its technology
management is MercyCare Service Corporation, Cedar Rapids,
Iowa, wbicb includes one bospital, a cancer center, family
practice and specialty clinics, urgent care, and other outpatient
centers. MercyCare has been moving away from a care delivery
model designed around individual services areas and is redeploying IT to better support integration.
“Data flow used to be limited between service areas,” says
Jeff Cash, MercyCare’sseniorvice president and CIO. “We
were utilizing an integrated inpatient bospital information
system, but we bad deployed individual electronic medical
records in many bospital-based outpatient areas, including the
emergency department, medical and radiation cancer centers,
obstetrics, OR, and dialysis. We also bad a complete but separate electronic medical record and revenue cycle system in
our ambulatoiy clinics.”
This lack of integration impeded efficiency and effectiveness.
The organization bad developed a lot of paper-based processes
involving different hand-off and transition-of-care documents
due to tbe lack of integration between systems.
What’s more, in June aoia, MercyCare and Univeristy of Iowa
Healthcare formed a Medicare accountable care organization
(ACO), and then joined with two additional healthcare organizations to form Tbe University of Iowa Health Alliance (UIHA).
Tbe UIHA now represents 50 hospitals and more than 160
clinics to provide expertise sharing, support services, and IT.
To derive greatest benefit from tbe collaboration, Mercy needed
better data sharing capabilities with tbe other entities.
Recognizing these challenges, MercyCare’s leaders began
testing the boundaries of integration to determine bow tbe
various parts of tbe organization’s system could work together
more efficiently and identifying existing redundancies and
gaps. One barrier addressed was tbe organization’s eight disparate medical record systems and data warehouses.
“We bad lots of data, but users bad a bard time drawing meaning from the data or being able to access the data with tbe level
of detail ortimeliness needed to make decisions. Pulling
together a what-if analysis’ to answer questions from a physician or strategic adviser ofien became a monumental project,”
Casb says. Each system bad its own set of self- contained workflows, which was a real barrier to patient flow through tbe
Based on the analysis, organizational leaders decided to invest
in a single electronic patient record system and data warehouse
across tbe entire health system, wbicb was recently implemented. “Tbe strategic goal is to bave one patient record for
clinical care and allow it to be used for multiple workflows,
and we now have a single data repository we can work from to
identify sources of deviation that need to be corrected or best
practices that should be shared,” Casb says.
MercyCare and tbe UIHA also explored technology that would
best support efforts to manage population-based health statistics and bealtbcare delivery within the multi-organization ACO.
Greatest value could be found with a system that would integrate
with other participants and provide integrated workflows and
data sharing throughout tbe delivery system.
With its ACO partners, MercyCare and tbe UIHA bave contracted with a population bealtb data management vendor so
“tbose of us wbo share care coordination for a patient can look
at shared patient data, and we can also de-identify and aggregate tbe data to see bow we are performing at the individual
bealtb system level and as a collective organization within the
state of Iowa,” Cash explains.
HFMA EDUCATIONAL REPORT 5
STRATEGIC AGILITY SERIES, REPORT 2 SPONSORED BY GE CAPITAL
The path to integration has led MercyCare to take a granular as
well as global view of strategic projects and to engage more
stakeholders. Although the health system reviews every project
on its own merits, it also examines asset investments as part of
the fabric of the future. “We thought we couldn’t stop projects
that were in process because we were making business investments at different times to meet the cHnical needs of different
service lines and didn’t think we could find the right time to
stop making those investments,” Cash says. “But instead of just
thinking about individual projects, we refocused on a common
goal: the wholesale replacement of what we were using for the
electronic medical record.”
Redistributing Organizational Resources
to Support Growing Service Lines
At Andalusia Regional Hospital, Covington County, Ala., leaders
are taking a fresh look at the utilization and productivity of core
assets and business lines to identify and bolster those that are
clinically efficient and financially strong and add service lines
that take advantage of patient population characteristics in the
When deciding how to best structure assets for the future,
sometimes tough choices have to be made. The organization
has had to reconfigure or drop those service lines that do not
currently justify a major commitment in facilities or technology
or that do not clearly place the organization in a competitive
position going forward.
Leaders at the lOO-bed facility closed the spine and kyphoplasty
program in 3010 and an inpatient rehabilitation unit in aoia.
“Changes in the reimbursement structure, a low overall census,
a return that was not as high as it needed to be, and volume that
did not cover fixed costs led us to those decisions,” says Shirley
Refocusing resources in this way has allowed the hospital to
capitalize on opportunities to create new product lines. Cancer
care and wound care arc just two service areas bcnefitting from
redistribution of resources.
In aoio, the hospital leased property to 21st Century Oncology
to build a Y,42o-square-foot regional clinical cancer and radiotherapy treatment site that is equipped with a linear accelerator
and positron-emission tomography scanner. In conjunction
with 21st Century Oncology and Sacred Heart Cancer Center,
Andalusia opened a comprehensive cancer care center in 3011.
A little more than a year later, the cancer center was providing
more than 150 treatments a week.
At present, the hospital is converting a recently vacated medical
office building Into a wound care center that has the potential to
reduce outmigration, increase outpatient revenue, and raise
volumes and revenue for clinical departments, including general
medicine, the cath lab. outpatient imaging, and vascular,
general, and orthopedic surgery.
Andalusia Regional Hospital expects to make asset distribution
decisions more effectively and dynamically going forward, as it
improves its capabilities to gather volume, cost, and profitability
data across clinical service lines. The hospital is installing data
management tools that will tap into internal financial and
operational data and plumb external data sources to find poorly
performing sectors and areas with exeess capacity as well as profit
centers that could benefit from more careful use of resources.
“We need to dig in to see how our results differ from our
expectationsâ€”if volumes aren’t there or costs are higher than
we thought they would beâ€”once a m.onth or bimonthly,” says
Smith. “We can’t wait and look at this once a year. We need to
meet with physicians to talk about overall strategy and the
directions the hospital needs to take, to share market trends
and track outmigration. We need to determine what is going
on with our utilization and cost, so that we can decide when
improvements should be made orwhenwe should continue a
program. The data will also help us determine which services
should be added to better serve our community.”
Of course, examining which services are best supported is only
part of staying strategically agile. Leaders also need to analyze
ways to manage the desired service lines to best support longterm needs.
As part of this review, health system leaders may explore
whether consolidating services at different settings into one
location will make the most sense to optimize utilization and
best leverage clinical expertise. In other instances, organizations may even align with competitors to optimize asset use.
Collaborating with competitors can be a key means to fill service
gaps, create efficiencies/enhance bargaining power, reduce
competition in a weak market, and share investment risk.
Such strategic alliances can range from j oint operating agree –
ments on the highly integrated end to joint ventures and shared
service organizations, such as the alliance referenced earlier with
MercyCare and the UIHA, on the loosely integrated end of the
spectrum. Joint operating agreements operate in a merger-Kke
fashion in which most or all organizations arc combined, but the
collaborating organizations stop short of combining assets and
allow certain reserve powers to remain. More common are
various types of focused joint ventures and shared service organizations. In these arrangements, the alliances are narrowly drawn,
usually involving a single venture or, at most, a few areas.*
The Role of the CFO
Agile asset management rests on anticipating the new, postreform world of healthcare delivery in terms of top-line revenue
and likely competition to form a strategy that is relevant for
the communities served. This visioning will need to factor in
6 August 2013 Â© 2013 Healthcare Financial Management Association hlroa.org
OUR SPONSOR SPEAKS
THE IMPORTANCE OF CHALLENGING TRADITIONAL
PARADIGMS TO OPTIMIZE ASSETS
Jeff Wagoner, U.S. commercial leader, healthcare financial services, with GE Capital, discusses how redefining
certain constructs regarding asset management will be essential to maintaining strategic agility in the lace of ongoing
What are some core considerations for hospitals
and health systems when managing assets for
The level and duration of change created by the Affordable
Care Actâ€”from definition and passage through long-term
implementationâ€”underscores several key considerations
all health systems will face when examining asset use in
the foreseeable future.
Uncertainty is now the norm. The abÃ¼ily to buud future
flexibility into today’s capital investments is critical.
Incremental actions are not enough. The degree of financial
performance risk created by the ACA is significant and
diverse. Replacement strategies, for example, need to be
elevated to a broader focusâ€”clinicaEy, operationally and
economicallyâ€” for bigger impact.
Decision variables are expanding. In the shift from volume –
to value-based reimbursement, a much more complex set
of assumptions is required to vision capabÃ¼ity and capacity
needs. Identifying and routinely traeking these assumptions
will best position the organization to recognize when course
changes or corrections arc needed.
Source; GE Capital.
greater coordination and integration with a range of delivery
partners to ensure assets are deployed in a way that supports
investment for greatest efficiency and effectiveness.
The CFO wÃ¼l play a vital role in shaping this strategy. Working
with clinical and operational leaders, financial executives
should seek to incorporate the following actions when identifying the right asset deployment to support value going forward.
Understand the utilization and productivity of core revenueproducing assets and business lines. Where is use highest? What
factors would improve utÃ¼ization? Where is utÃ¼ization likely to
be most vulnerable? How might utÃ¼ization change should
relationships with competitors shift?
Determine which assets and business lines are most/least
efficient. What is cost per use? How might cost per use change
with shifts in patient mix, payment, technological advance –
ment, vendor competitive landscape, etc.? Would a void be
created if the business/services supported were not provided?
The Importance of asset ownership is changing. In many
organizations, there has been a historical belief that owning
certain types of assets is the clearest path to maximize rettim
on investment. However, in a market environment that is
dynamic, maintaining ongoing flexibility is key. Asignificant cost of ownership therefore is the potential to limit the
organization’s abÃ¼ity to realign capabilities and eapacity in
the future if actual demand varies from assumptions made to
justify investments. The consideration of alternative funding
vehicles or operating structures can create opportunities to
reset if needed, thus helping to ensure today’s optimization
plans continue to be effective over time.
Traditional supplier relationships and operating structures
may not be enough. To achieve and sustain ongoing strategic
agÃ¼ity, it is essential that key suppliers be equally as agÃ¼e.
Factors such as flexibÃ¼ity and the willingness to sbare risk
created by uncertainty are as important in the supplier
evaluation process as cost.
When navigating tbe shift to asset optimization, hospitals
and health systems shotild keep these considerations front
of mind, as they wÃ¼l significantly influence the prioritization
and deployment of capital investments.
Anticipate market change and right-size asset holdings to
address shifts in payment, utilization, and patient mix. How
responsive is the organization to changing capital demands?
Tools such as scenario planning wÃ¼l be increasingly important
in the post- reform era as providers face uncertainty regarding
competitive landscape, utilization, payment, and effects of
Identify opportunities for growth/areas of decline in the service
area served. How will new patient populations influence
demand for services? For example, how will a focus on chronic
care management influence utÃ¼ization?
Evaluate potential partners and types of relationships. Would
sharing equipment lower the cost per use and enhance patient
access to services? How could current assets be better leveraged
to make the organization a more desirable partner to others?
How important is tbe asset in supporting longitudinal patient
management across the care continuum?
HFMA EDUCATIONAL REPORT 7
STRATEGIC AGILITY SERIES, REPORT 2 SPONSORED BY GE CAPITAL
Reexamine supplier relationships. Which suppliers are willing
to work with you more strategically? How progressive are they,
and will they have the depth and breadth of experience to help
you anticipate shifting needs and obtain greatest value from
Create a capital plan that doesn’t just replace existing equipment asa matter of course. Are you considering utilization
patterns and relying on data to help ensure that a streamlined
inventory of assets won’t turn into longer waiting times or
compromises to cjuality or patient satisfaction? How responsive
is the forecasting model you are using to shifts in utilization
Look (or new ways to mitigate asset acquisition risks. When
is access to an asset more prudent than ownership? Are there
ways to structure your capital investments to better mitigate
increased economic risk or share some of this risk with others?
CFOs need to become more engaged in the capital decisions
their organizations are making. And not just on how assets are
financed or whether the organization is getting a “good buy.”
Strategic agÃ¼ity wÃ¼l depend on creating a robust strategy that
supports momentary market advantages and an ahÃ¼lty to buÃ¼d
new capabilities, reallocate resources, and orchestrate complex
and multiple changes.^ The underpinnings of such a strategy
wÃ¼l be asset optimization.
How effectively an organization uses its resources will determine
ready access to capital, streamlined holdings to maximize
competitiveness, and the organization’s abÃ¼ity to access the
business intelligence needed to move toward outcomes-based
care delivery in a more integrated and risk-based environment.
As one healthcare finance expert writing to CFOs recently
noted: “As the U.S. healthcare system transitions to a new
reimbursement environment, hospitals and health systems are
viewing the future of their operations through a new lens.
Resources are likely to be constrained in the comingyears,
making it Increasingly important for providers to maximize the
return on operating and financial assets.”^
As the financial stewards of their organizations, CFOs wÃ¼l play a
key role in determining whether their organizations achieve the
asset management competencies needed to heed the call for
1 Heedingthe Call for Strategic Agility, Strategic Agility Series, Report l,
HFMA, sponsored by GE Capital, May aoi3.
^ “Imaging Economics: To Buy or Not To Buy?” Imagingservices.
us.com, July 5, ?oi:Ã¤.
^ BuildingValue-Drinng Capabilities: Business Â¡ntelligeace. HFMA Value
Project report, HFMA, January :ioi:Ã¤.
^ Zuckerman.A., “Clobber or Collaborate? Takinga Fresh Look at
Your Competition,” hfm, November, Ã„OO6.
5 Built To Changeâ€”CreatingAgile and SustainaUy Successful
Organizations, Center for Effective Organizations, University of
Southern California, 2009.
^ Jordabl, E., Robbins, M., “Deftningtbe Role of Invested Assets Is
Essential to Success,” HFMA CFO Forum. HFMA, May:3oi3.
Healthcare Financial Services
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About HFMA Educational Reports
HFMA is the nation’s leading membership organization
for more than 39,000 healthcare financial management
professionals employed by hospitals, integrated delivery
systems, and other organizations. HFMA’s purpose is to define,
realize, and advance the financial management of health care.
HFMA educational reports are funded through sponsorships
with leading solution providers. For more information,
call 1.800.352.HFMA, ext. 33o.
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