Transforming Performance:
Where to Look to Capture Big Gains
Q&A with Chris Drummond, Managing Director, Huron Healthcare
1. Can you share what you are seeing in today’s healthcare operating environment and how leaders are responding?
CD: With the rapid market consolidation of the industry, many leaders are facing complex organizational problems…and they’re identifying the need to improve overall financial performance by 20 to 40 percent over the next three to five years to prepare for what’s coming. Lack of alignment and financial uncertainty won’t work. Transparency and efficiency are critical.
The challenge is that most have already picked the low hanging fruit over the last five years. But the good news is that we are finding even high-performing organizations can capture this additional 20 to 40 percent improvement.
2. Where are leaders finding these opportunities?
CD: In most organizations there’s an opportunity to improve operational excellence by nine to 18 percent…in areas like labor management, revenue cycle, and supply chain cost containment, to name a few.
We also find that organizations can improve by seven to 14 percent through clinical transformation by assessing the efficiency and effectiveness of clinical operations, ensuring medical groups are running at peak efficiency, and examining how well the organization’s structure and culture support clinical integration.
And finally, we see gains of 4 to 8 percent through economies of scale and integration by optimizing assets, aligning incentives, and establishing deep operational and data integration.
3. What do the needs assessment process and work plan typically look like?
CD: Organizations contact Huron Healthcare for a variety of reasons so we customize our needs assessment. Sometimes operating margin is eroding. For one large system, we were able to improve a 1.5 percent operating margin to 7.8 percent (with $200 million in annually recurring benefits). Other times, an organization is achieving record profits but wants to be proactive. They’re doing okay now but want to “fix the roof while it’s sunny” to compete in the population health market.
The process typically begins by requesting data that is then analyzed by appropriate specialists at Huron. With more than 1,500 specialists, we bring deep bench strength to solving a tough challenge in a very non-invasive way. Those recommendations then guide our onsite interviews and observations and eventually the action plan and implementation that we recommend to senior executives.
Implementation takes a lot of different forms. Many organizations can’t afford to invest in a consultant to do everything so we might use an approach where we implement a solution in one group of hospitals, then advise on the next set, and then train behind-the-scenes on a third set for cost efficiency. Other times, we help them build those capabilities internally. In the end, it’s about the most efficient and cost-effective way to meet the needs of the organization.
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