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Tough Times Ahead for Hospitals
By Debra Wood, RN, contributor

Potential cutbacks to Medicare reimbursement, increasing numbers of uninsured, possible mandates to implement electronic record systems, and the inability to bill for medical errors will conspire to make the coming year more difficult for hospitals, leading to more joint operating agreements, mergers and layoffs, according to industry experts at the Modern Healthcare TrendWatch breakfast at the HIMSS conference in Orlando, Florida.

“When people decide to marry their organizations, obviously they are looking for leverage in the marketplace--how do you get more price to pay for infrastructure we provide day in and day out,” said Steven Sonenreich, CEO of Mount Sinai Medical Center and Miami Heart Institute in Miami Beach, Florida. “Layoffs also are indicative of an industry challenged by a large uninsured population and a working uninsured population.”

Modern Healthcare editor David Burda reported Empire Health Services in Washington State recently laid off 130 full-time people and Middle Tennessee Medical Center in Nashville announced plans to lay off 36 people, 3 percent of its workforce.

Sonenreich called health care a bifurcated system, with organizations in upscale areas, where people are employed and insured, being financially successful, while other facilities, in areas with high numbers of uninsured, struggle to fulfill their missions.

“We all have competing interests,” Sonenreich said. “We want what’s best for our community and that everyone have access to care, regardless of financial situation. But we need to fund this and make sure all hospitals have the ability to do well.”

Rick Schooler, vice president and chief information officer at Orlando Regional Healthcare in Florida, agreed that reimbursement is getting tougher. Consequently, organizations are looking to streamline operations to “get the same job done with fewer resources.”

Calling this an interesting time of challenge, Sonenreich said to be successful, hospitals need to be part of a large system and use that base to spread growing expense, so he predicts more mergers and acquisitions, many of which will be nonprofits acquiring for-profit facilities.

Sonenreich reported his facilities’ commitment to electronic medical records is driven by a desire to improve patient safety. He explained that what many lay people do not understand is that technology does not replace people. It not only requires an investment in hardware and software, but also highly skilled informational technology experts and changes to operational processes. He said that government mandates to implement technology should come with funding.

“IT is really expensive,” Schooler said. “Whether you look at the process of getting it done, access to capital and getting the right people to do the work, it is no easy thing. A lot of industries have been automating for many years. They go about it in a way health care is going to learn. You cannot spend the money and not get the value from it. Without the engagement and will to implement and redesign how we do things and think, it won’t happen.”

Schooler said technology can help organizations change their cultures, but to do so, hospitals will have to take a different approach. He anticipates greater use of data mining. That information could be used to improve quality and operational processes.

“I hope when institutions become stronger financially, they will meet the challenge of their mission and enhance their mission,” Sonenreich said. “All hospital missions are based in high quality patient care.”

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