The dominant threat identified by 93% of responding CEOs—reduced reimbursements—reinforces Elegant's prediction. Echoing many around the country, he says that in the future hospitals will have to survive on rates that will not exceed what Medicare pays.
"Very few right now are break-even or profitable based on what Medicare reimburses," he says. "Some have estimated as much as 20%-30% of costs will have to come out."
How will they get there? Elegant says much of the so-called low-hanging fruit has been harvested. "We joined GPOs, outsourced departments, and sat on travel expenses. Those are easy. The next step will be much more difficult because it will be savings related to care management."
That provides an easy segue into what the CEOs who took the survey see as the single most daunting challenge regarding clinical quality improvement: Care coordination and the continuum of care was first on the list with 27% of respondents. Similar care management challenges occupied the second- and third-place slots: Population health management received 21% of the response, and care episode payment bundling garnered 15%.
"Care coordination is certainly becoming the new buzzword," says Elegant, who adds that performing that role is an entirely new concept not only for hospitals, but for almost all entities that provide healthcare services. However, hospitals are directly in the firing line for most penalties if care coordination is not done well.
Business intelligence and analysis is one way many hospitals hope to get better control of cost and quality, but it's a function described as neutral, weak, or very weak by more than half of CEOs. Only 9% consider their organization very strong in this regard, with another 34% describing this function as strong. And yet, with considerable room for improvement, only 7% of CEOs described business IT as a top-three priority.
With further development of the electronic medical record, however, Elegant says software solutions will improve and provide better business intelligence. In other words, business intelligence in healthcare is not quite ready for prime time, at least as CEOs see it.
"For that reason, we're much more focused on how we're going to reduce our costs, [how we'll] live with the playbook, and how we're reimbursed," he says. "That's probably why it's a much lower priority. It's something we could use, but in the grand scheme it's not among the highest priorities."
This article appears in the January/February 2013 issue of HealthLeaders magazine.