Hospital and health system leaders nationwide face a slew of challenges as they steer their organizations through 2024 and beyond. Knowing how to balance current challenges and capabilities with future priorities will be essential.
During a recent panel discussion hosted by Strata, three chief executive officers discussed current challenges, including coping with high labor costs and reducing unwarranted variations in care. While the industry continues to face many of the same, broader challenges — such as controlling costs, navigating workforce issues, and managing margins — the executives said the tactics for addressing them must evolve. Top priorities include ensuring patients are treated in the most appropriate care settings and realizing the full benefits of available technologies.
The ongoing struggle to address high costs
Rising costs — especially elevated labor costs — remain a major concern for healthcare leaders. A recent Strata survey of healthcare finance leaders nationwide found that contract and employed labor were identified as the biggest unforeseen costs of 2023, and reducing costs remains the No. 1 priority for 2024. While many hospitals and health systems have successfully reduced contract labor costs that skyrocketed during the COVID-19 pandemic, inflation and competition to recruit and retain qualified personnel have contributed to higher employed labor costs.
“Labor expense is always the greatest expense,” said Trevor Wright, Chief Executive Officer of Loma Linda University Health. “In the inflationary environment we’ve experienced, regular labor rates have gone up. I think we’re up roughly 15% year-over-year in terms of our base. It’s become a race to retain talent, and compensation doesn’t do all of that.”
Loma Linda University Health is a six-hospital health system in Southern California with about 14,000 employees. Demand for care is high and about three-quarters of the system’s patients are on government health plans. To exacerbate the challenges for health system leaders in California, laborcosts are expected to continue to rise as the state moves toward its goal of a $25-an-hour minimum wage for healthcare workers by 2026.
Additionally, retention has always been a challenge in a competitive healthcare market, but it has become even more challenging since the pandemic, Wright said. Healthcare professionals have a lot more choices for where they work. Health system leaders need to engage in true process engineering to eliminate cumbersome processes for overburdened healthcare workers.
“With the proliferation of technology, there are unlimited options for people, even in the clinical delivery space,” Wright said. “My big concern is that we will lose people if we don’t improve processes and start to make the work easier.”
In the northern part of the state, University of California (UC) Davis Health is working to decrease costs by reducing unwarranted variations in care, said CEO David Lubarsky, M.D. Leveraging artificial intelligence (AI) to provide accurate and meaningful data to illustrate the problem to clinicians will be key.
“AI has the power to aggregate vast amounts of data and demonstrate the impact of different care pathways, informing nurses and physicians about the optimal way to deliver care for each patient,” Lubarsky said. “With AI providing constant surveillance of practice variations, maybe it won’t take many years for improved care algorithms to make their way into daily practice. We need to align incentives with this to speed up the adoption of these more effective approaches to improved care.”
The Strata survey found that while 95% of healthcare organizations use external benchmark data, 92% of healthcare finance professionals said their organizations should do more to use such data to inform strategic decisions.
The panelists agreed that rising costs and low reimbursements, especially from government payers, are a major concern. John Couris, President and CEO of Tampa General Hospital in Florida, said healthcare as a whole needs to develop more efficiencies.
“We need to do a better job as an industry on care coordination, patient experience, access, and convenience,” Couris said. “We are creating a healthcare ecosystem that provides a frictionless environment for our patients, physicians, and allied health professionals.”
Providing the right care in the right place
Right-sizing care delivery is another common priority. Loma Linda University Health has had a multi-year initiative aimed at consolidating higher acuity cases in facilities equipped to provide the highest levels of care, and ensuring other patients are routed to the most appropriate facilities.
“We’re focused on getting the right case in the right place,” Wright said. “The goal is to consolidate our high-level cases — inpatient and up — in your academic medical centers. Our hospital leaders are focused on ensuring we deliver the best, highest quality patient care in the most effective and efficient manner.”
Over the next five years, Tampa General Hospital will use data and technology to drive transformational changes, Couris said. Priorities include strengthening the institution’s academic and research enterprise, and expanding outpatient care for greater patient access, including leveraging partnerships to extend rehabilitation and behavioral health services.
“We want to make sure patients have a seamless, frictionless experience,” Couris said. “My job is to make sure we have systems in place that provide the best services, the best outcomes, and the best quality at the best cost, and that we’re able to sustain it, reproduce it, and pass that value on to consumers.”
The challenges and potential of technology
While technological advancements have brought many improvementsto healthcare, they have also contributed challenges. Wright, of Loma Linda University Health, cited electronic health records (EHRs) as an example of an unfunded mandate that has brought significant costs and administrative burdens to healthcare organizations. He hopes advancements with natural language recognition software will help eliminate some of those burdens so clinicians can spend more time focused on direct patient care.
“In my opinion, the promise of technology has not been delivered for the people who are providing the care,” Wright said. “We’ve got to get to some real, honest expense reductions and benefits for caregivers that allow them to interact more with patients.”
At Tampa General, Couris said he wants administrators and clinicians to get the most out of the technology available. “Our job is to make sure the right people know the solutions and know them well, so they do not sub-optimize the tools,” he said. “We have some powerful tools, and it’s incumbent upon us to make sure we maximize what we have.”
Looking to the future, Lubarsky of UC Davis Health said AI has tremendous potential to help providers enhance patient care. He envisions a time soon when health systems can use AI to really personalize care. For example, AI could monitor weather patterns relative to scheduled patient visits so providers can proactively address the needs of patients who rely on public transportation, and therefore are less likely to attend appointments during inclement weather. In such cases, the health system could offer a ride share credit or other assistance to ensure patients don’t miss their appointments.
AI also could help clinicians address common challenges, such as reconciling medications to prevent adverse reactions, predicting when care regimens should be adjusted, or analyzing patients’ risk factors, he said.
“It can be personalized, and it can be escalating,” Lubarsky said. “Eventually, AI will be able to help us figure out who’s at risk. It will depend on factors such as childcare, work hours, and whether public transportation is running on time. When we figure all that out, then we’ll be able to do something that’s meaningful. That’s not a long way into the future.”
Whether it’s addressing workforce challenges, optimizing internal operations, or adopting new technologies to improve efficiencies and enhance patient care, healthcare CEOs are evolving their tactics to meet their stakeholders where they are today.
Frank Stevens
Frank Stevens is Chief Growth Officer at Strata Decision Technology.
