Is your hospital’s operating model set up for the future?

Hospital and health system leaders recognize that nearly every aspect of the new health care economy has changed. However, many organizations still struggle to achieve clinical, financial and operational efficiencies with legacy models.

What is needed is a new operating model designed to address the significant changes that are reshaping healthcare markets.

A recent AHA Market Scan pioneer report, Thriving in the New Health Economy—How Hospitals and Health Systems Can Change Their Operating Models to Ensure Sustainability, explores the key principles and features of this new operating model. It shows how two health systems are successfully using it to sustainably respond to evolving market forces transforming their health care economies. Here are some key takeaways:

The need for a new operating model

A survey conducted by Sage Growth Partners found that senior executives at hospitals and health systems identify two top goals for 2024 and 2025: reducing the total cost of care and achieving financial sustainability. These priorities are reflected in how organizations direct their investments in digital and information technologies. According to a Guidehouse survey, hospital executives named increased operational efficiency and improved patient experience as the top expected benefits of these investments in 2024.

To address growing challenges such as consumerism in healthcare, price transparency, virtual care, digital health technologies, hospital-at-home models, diverse care delivery locations, and new medical technologies, many organizations are adopting new operating models.

As stated in the Trailblazer report, a successful operating model combines two main pillars: strategy and operations:

• Strategy: Why are we doing this? Establish clear goals and strategic decisions that will guide daily activities.
• Operations: What do we do and how do we do it? The new operating model translates strategy into a structure that defines where and how critical work in the system is performed. This ensures that the organization functions coherently and not as a collection of independent parts.

New operating models in action

For example, Main Line Health changed its operating model. Main Line, which operates five hospitals near Philadelphia, is grappling with the fallout from the closure or reduction of services at other hospitals in its market. These market dynamics create enormous capacity challenges for Main Line hospitals and emergency departments.

To address this challenge, Main Line changed the system’s operating model to focus on solutions to Main Line capacity problems, including significant market changes such as staffing shortages and an aging patient population. The new operating model allowed:

• Virtual Care Operations Center: Opening in 2021, this virtual health center will monitor staffing, bed availability and patient transportation across all hospitals. It also centralizes the planning of surgical and diagnostic procedures across all institutions.
• Virtual Buddy Program: This program allows one staff member to remotely monitor up to 12 patients at a time and speak with them through a microphone to answer questions or address needs.
• Program “From hospital to home”: This initiative reduces unnecessary hospital days and frees up beds by identifying patients who can be safely discharged home.
• Virtual Nurse, Physician and Advanced Provider Programs (APPS): These programs allow nurses to monitor patients remotely and doctors and healthcare workers to remotely screen emergency patients and decide whether patients should be sent home or admitted to the hospital.

SSM, which operates 23 hospitals and hundreds of other care facilities in four states, faces the challenge of serving a wide range of urban, suburban and rural markets, all of which face challenges unique to their communities. To address this challenge, SSM has implemented a new operating model that allows it to operate as a system rather than a collection of disparate suppliers, and allows the organization to more quickly adapt and respond to internal and external pressures.

“We decided to take a decisive approach to these challenges by becoming more innovative and agile,” said Laura Kaiser, president and CEO of SSM Health. “Working as a unified system on efforts that can best be addressed based on size, scale, talent and experience helps us respond to growing challenges in our industry.”

The system implements a new operating model that enables faster, more robust, and more consistent responses. SSM Health’s customized model is largely based on lean management principles aimed at continuous quality improvement.

One of the operational changes is focused on hands-on leadership. Regional and local SSM managers regularly visit employees to learn about their progress towards achieving strategic goals. SSM Health has used this approach to dramatically reduce the incidence of catheter-associated urinary tract infections and central line-associated infections to the point of eliminating them from the active target list. The new goal is to effectively manage patients’ blood sugar levels to help improve their clinical outcomes.

Key Takeaway

Traditional tactics used by many hospitals and health systems are proving ineffective against disruptions in their markets. These failures persist because they are not temporary; they are constant and significantly change these markets.

To adapt, hospitals and health systems need innovative models and strategies that are equally durable and effective. They need a more efficient approach to develop and implement these solutions faster, better and at a lower cost. The key is to adopt a new operating model that translates strategy into structure, delivering improved results.

Download Pioneers will report now!