How to achieve financial sustainability
Optum experts discuss a three-pronged approach.
OAS Financial Sustain Transcript
Eileen Russo: Industry experts are sounding alarm bells about the financial outlook for non-profit hospitals. Operating margins and cash flow have fallen to levels last seen during the 2008 recession. Unlike periods of decline in the past, the cause isn’t a specific event that will reverse itself over time. It’s just the opposite: a combination of multiple forces is leading to structural changes that will significantly slow revenue growth for many years to come.
John Johnson: Cost growth is now outpacing revenue growth—and health systems are rapidly reaching a financial tipping point.
In order to close the growing financial gap, they need a bold new approach to realign costs with revenues.
Short term, reactive cost-cutting is no longer enough—the problem is too large and too long term.
Health system leaders must have a comprehensive, coordinated strategy for financial sustainability that they follow, year over year over year.
Eileen: Successful organizations will relentlessly focus on three key areas.
First, instill rigorous discipline in traditional performance levers to slow cost growth in areas like corporate services, labor and supply chain. And traditionally structured revenue cycle.
John: Second, as we transition to new consumer and payer demands, we have to tackle the inefficiencies of our traditional care delivery model.
The opportunities to improve quality and cost are significant in both fee for service and value-based payment structures.
Translation: It's better for patients, better for the bottom line.
Eileen: And third, health systems have to address the truly difficult questions that will determine whether they can transform themselves for growth:
Do we have the right assets and are we making the most of them?
As future demand shifts--where do we invest more—and where do we let go?
And how do we enhance the patient financial experience to ensure the loyalty of customers?
John: So health systems need to develop their own unique strategy of traditional, transitional, and transformational performance levers to achieve financial sustainability.
Eileen: This is not about making incremental changes. It is time to begin charting a new course through unfailingly disciplined operations, reliable, efficient clinical care, and truly innovative delivery models.
John: This isn’t going to happen overnight. Recognizing just how different the health system of the future looks is the beginning of the journey toward financial sustainability.
A roadmap for health systems
Health systems today face margin challenges like never before. In this short video, Optum Advisory Services experts John Johnston and Eileen Russo lay out the three strategies health systems must address to preserve margins and become financially sustainable. Learn more about financial sustainability.
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