Hospitals' Top Priorities Swing to Growth over Costs for 2019

Hospital and health system executives are shifting their top strategic focus from cost control to revenue growth, according to Advisory Board’s Annual Health Care CEO Survey.

For the second time in three years, the No. 1 concern for hospital executives is improving ambulatory access, meaning adjusting facilities, staffing, hours of operation or throughput to increase patients’ ability to receive care across the health system’s outpatient locations, physician offices and clinics. In the nationwide survey of 90 C-suite leaders conducted between January and March 2019, 57 percent of executives said they were extremely interested in the topic, which rose from eighth in 2018 and can help health systems increase patient volumes and revenue.

CEOs, particularly at large health systems, are still seeking new and effective cost-avoidance measures but see top-line growth as even more pressing. Two of the top three topics related to business expansion.

“Health systems have not given up their keen eye on improving cost control, and yet C-suite executives recognize the need for comprehensive margin management strategies that include revenue growth,” said Christopher Kerns, executive director, Research at Advisory Board. “Balanced strategies are the key to achieving financial viability and securing the strategic flexibility necessary to respond to new market entrants and disruptors.”

The survey asked executives about their level of interest for 29 topics, including meeting rising consumer demands for service, developing a Medicare Advantage strategy and building an effective innovation hub. The Top 5 areas of extreme interest to hospital and health system executives are:

1. Improving ambulatory access (57 percent)
2. Minimizing unwarranted clinical variation (53 percent)
3. Strengthening primary care alignment (53 percent)
4. Redesigning health system services for population health (52 percent)
5. Innovative approaches to expense reduction (51 percent)

Minimizing unwarranted clinical variation refers to reducing the utilization of treatments that do not improve patient outcomes. Strengthening primary care alignment means improving the hospital-physician partnership to enable mutual success under different payment and care-delivery models. Redesigning health systems for population health refers to making organizational, facility, process and technology changes to support care and payment models that promote improvement in patient outcomes rather than care volume.

“Executives are more interested in moving upstream to capture revenue growth through ambulatory access and primary care, rather than traditional strategies of boosting hospital market share,” said Yulan Egan, practice manager, Research at Advisory Board.

Only one of the Top 5 areas of interest from 2018 ranked among the Top 5 for 2019: innovative approaches to expense reduction. Last year’s No. 1 topic, preparing the enterprise for sustainable cost control, fell to No. 11 out of the 29 topics included in 2019.

To get an even clearer view into C-suite executives’ priorities, a separate survey question asked respondents to name their single top priority among high-level categories. Revenue growth led at 21 percent, followed by population health and Accountable Care Organization strategy (20 percent). There was a three-way tie for third at 13 percent among cost containment, physician network alignment and systemness, which means efforts to streamline operations, deliver more reliable and coordinated care, rationalize fixed costs and even transform entire business models. Unlike the rest of the survey, this question required that respondents choose only one category. Last year, 24.5 percent of executives chose cost containment, giving it the 2018 top ranking.

Advisory Board’s membership includes many of the largest and most progressive hospitals and health systems in the United States. Survey questions are based on Advisory Board’s more than 10,000 annual research interviews with health care executives.

For further insight into the topics of greatest interest to hospital and health system leaders, visit the Advisory Board’s At the Helm blog. Health Care Advisory Board members who could not attend the 2018-19 National Meeting Series can download the briefing 15 Things CEOs Need to Know in 2019 and view a webconference series recapping insights on top concerns for health system C-suite executives.

About Advisory Board
Advisory Board is a best practices firm that uses a combination of research, technology, and consulting to improve the performance of 4,400+ health care organizations. An Optum business, Advisory Board forges and finds the best new ideas and proven practices from its network of thousands of leaders, then customizes and hardwires them into every level of member organizations, creating enduring value. For more information, visit www.advisory.com.

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