Margins continue to shrink as the healthcare industry experiences changing payment models, rising labor costs, aging baby boomers, and an uncertain regulatory environment — and none are feeling financial pressures more than nonprofit hospitals.
The latest evidence: A report from Moody's Investors Services shows the growth of expenses among nonprofit hospitals is outpacing revenue, a gap that is putting the sector on what it termed as an "unsustainable path."
Faced with such dire circumstances, where do nonprofits need to shift the focus to improve their financial standing in 2019?
According to Jennifer Beaudoin, Vice-President of Sales Strategy for SCP, four strategic areas top the list: patient experience, the community health needs assessment, community education, and quality care.
1. Patient Experience
Enhancing the patient experience is receiving increased attention in hospitals as consumerism in healthcare continues to intensify.
Not only that, but also hospital and health system reimbursement is more closely tied to patient satisfaction than ever and is only expected to strengthen in years to come.
Why is focusing on patient experience so critical for nonprofits? "So that patients come back," Beaudoin emphasizes. "For nonprofits, it's a matter of building patient loyalty and lifetime value.”
2. Community Health Needs Assessment
The Patient Protection and Affordable Care Act added section 501(r) to the Internal Revenue Code, which enforces requirements on 501(c)(3) organizations that operate one or more hospital facilities.
One such requirement is to conduct a community health needs assessment (CHNA) and adopt an implementation strategy at least once every three years.
"The CHNA is the guiding document that prescribes the direction the hospital needs to go to develop community-based education programs," explains Dr. Steve Nichols, SCP Chief Clinical Operations Officer. "It drives everything the hospital does when looking at the socio-economic and healthcare needs of all the people in the community service area. Once hospitals go through the process of identifying what the needs are, they have to follow the plan and report data and success for a three-year period. It is clear that Social Determinants of Health matter, and should be addressed if possible."
3. Community Education
While it’s true that nonprofit hospitals must prove a community benefit through their tax forms to maintain their 501(c)(3) status and exemption from federal, state, and county taxes, that is not the only benefit. Focusing on the communities around them endears nonprofits to their neighbors, adding a less tangible but still valuable asset.
One of the best ways nonprofits can provide benefit to the community is by offering education programs that stem directly from the CHNA findings.
Education can take many forms, depending on the needs of the community. Some of the more common relate to topics such as opioid addiction, obesity, diabetes management, pregnancy, and nutrition.
"Regardless of the particular issues being addressed, the ultimate aim of the hospital is to change the quality of life for the people living in the community for the better," Dr. Nichols says.
Another way for nonprofits to benefit the community is to partner with community organizations to teach education programs.
"One hospital in the Lafayette (LA) area partnered with SCP’s direct-to-employer WellnessWorks service to start a balance program to help patients suffering from broken hips," Beaudoin remarked.
WellnessWorks, an SCP service line since 2012, is a perfect fit for nonprofits because it links the ongoing healthcare needs of employers, employees and their family members to providers.
"Through our direct-to-employer offerings, we can go out into the community, enroll employers and their employees into a community-specific hospital-based program that ensures that there is an easy entry point providing quality care within the health system," says Byron Speights, President of WellnessWorks. "It's an ideal way to drive much needed commercial business in the nonprofit’s direction."
SCP WellnessWorks enhances the community by incorporating a strong link between the local market, providers, employers, employees and the general public through health events for enrolled employers. The positive interactions between the participants create a community bond and helps employers better utilize their health insurance benefits while increasing utilization of healthcare services and building stronger relationships.
4. Care about Quality
While WellnessWorks can help with growth, SCP’s consulting services team can help with strategy, telemedicine, NP/PA coverage models, and management services options, all of which are designed to generate more revenue, increase efficiency, and cut costs.
"While it's true that all hospitals should pay attention to quality, nonprofits need to be even more attuned to providing quality care to their patients because their very lifeblood depends on it," Beaudoin says. "They need every patient they can get. Their revenue is coming from a different dynamic, so they need volume to improve revenue."
The other focus areas beget this one. If you provide desirable community education and build patient loyalty outside of the hospital, while using your CHNA as a guidebook to serve specific needs in your area, you’ll likely drive a better patient experience. All this ladders up to a focus on quality and ensuring optimum care for all patients.
While it's true that nonprofit hospitals face an uphill battle regarding revenue, by shifting their focus to these four strategic areas — care about quality, patient experience, the community health needs assessment, and the community programs that stem from it — they stand a much better chance of survival in 2019 and beyond.
Contact our Business Development team to learn more about the programs offered by SCP that benefit nonprofit hospitals.