Financial and Operational Strategies

Hospital Best Practices and Recommended Strategies

The below best practice recommendations, transition strategies and performance improvement tools assist leaders with maximizing financial performance and improving operational efficiencies to financially stability of the hospital and position for the future.

Demonstration Of Value

Transition Strategies

  • Access the 2018 Rural Hospital and Clinic Financial Summit Report to identify the most important financial indicators and strategies to transition to value-based payment
  • Implement key transition strategies presented in the 2016 Financial Leadership Summit Report to transition to a value-based payment and care delivery model
  • Expand primary care services and available hours
  • Build a primary care health network
    • Align with primary care physicians and other providers
    • Recruit primary care physician and providers
    • Build relations with medical staff and partner with them
    • Partner and align with other local and regional providers
    • Develop affiliation strategies with potential hospital partners
    • Develop a care coordination plan with community partners and other local and regional providers
  • Market quality of care and patient satisfaction scores as a competitive advantage
  • Grow services and build customer loyalty to maximize fee-for-service reimbursement, while possible, by implementing the below strategies:
    • Market services to local and regional providers to increase referrals
    • Offer specialty and acute care services based on community needs
    • Market swing bed services to the community by promoting as ‘rehabilitation services’
    • Market swing bed services to other local and regional providers to build referrals and target best practice level for average daily census (ADC) at a minimum of 4.0
    • Market imaging, laboratory and rehabilitation services to local providers, schools and the general public to build community awareness of available services
  • Build long-term financial stability by investing in facilities and technology
  • Use the Transition Implementation Framework to:
    • Build awareness with the Board Of Directors and physicians of how the industry is moving to create an integrated delivery and payment system
    • Identify key operational tactics that are necessary to move the industry from a fee-for-service system to population based payment system
    • Educate Board of Directors and providers about the importance of matching the current operational strategies with current payment methods while preparing for the next payment methodologies

Performance Improvement Tools

Key Performance Indicators

Emergency Department (ED) Operations and Performance Indicators

  • Implement ED redirect program to navigate non-emergent patients to primary care services for more appropriate level of care and reduce unnecessary over utilization of ED services
    • Incentivize patients to obtain primary care services in clinics by increasing collection of co-pays and deductibles
    • Build awareness of available primary care services through marketing
    • Utilize opportunity to build PCMH
    • Educate community of appropriate ED services
    • Implement a policy to notify Medicare patients in writing that they did not meet inpatient criteria and that they are now in observation status, which requires them to be financially responsible for the outpatient co-pay
  • Implement an ED Super Utilizer Program to identify super utilizers and facilitate alternative care models such as primary care coordination and social service assistance
  • Examples of ED redirect and Super Users Programs:
  • Track and monitor ED admissions rate (acute and observation)
    • Target ED admissions (acute/observation) between 8% to 10%
    • Target observation days as a percentage of total acute days at the rural hospital best practice range of 15% to 25%
    • Review all Ed transfers for appropriateness to determine if patients could remain at the hospital for treatment
  • Track and monitor ED operational indicators by physician for the following indicators:
    • ED admissions for acute and observation
    • Transfers
    • Left without being seen (LWBS), door to admit time and door to provider time. Best practice rural hospitals target 17 minutes for door to provider median time.

340B Drug Pricing Program

  • Consider the benefits of 340B Drug Pricing Program in operational and strategic decision-making
  • Evaluate the financial benefit of the 340B Program for primary care planning and expansion

Department Accountability

  • Hold managers responsible for revenue, expenses, FTEs and statistics to drive financial, operational and quality performance
  • Build a quality-focused and performance excellence environment by holding managers accountable:
    • Support managers and front-line staff with ongoing educational trainings
    • Involve managers in operational and financial management through departmental budget preparation
    • Conduct monthly performance review meetings with each manager to discuss financial, quality, patient satisfaction and operational efficiencies opportunities and action plans for next steps
    • Require managers to complete monthly departmental financial variance reporting and provide action plan to respond to budget variances
  • Refer to Leadership for key recommendations for engaging staff

SRHT Hospital Success Stories

 share ways they utilized the recommendations from their Small Rural Hospital Transition Project (SRHT) Financial Operational Assessment.

This project is/was supported by the Health Resources and Services Administration (HRSA) of the U.S. Department of Health and Human Services (HHS) under grant number UB1RH24206, Information Services to Rural Hospital Flexibility Program Grantees, $1,560,000 (0% financed with nongovernmental sources). This information or content and conclusions are those of the author and should not be construed as the official position or policy of, nor should any endorsements be inferred by HRSA, HHS or the U.S. Government.