Access Drives Health System Transformation and Growth.

SUMMARY: Healthcare is in the midst of a "great disintermediation." New care delivery models are offering novel ways of accessing care and moving the US healthcare system from a hospital-centric to a consumer-centric focus. This transformation is opening new opportunities for technology-enabled, risk-ready innovators intent on disrupting traditional ties among health systems, primary care physicians, and consumers.

Ready for risk contracting?

Before taking on value-based care, hospitals must assess risk capacity.

Achieving sustainable cost transformation.

Means for hospitals and health systems to achieve necessary, sustainable cost transformation include: Using a structured approach with rigorous analysis. Understanding the organization's capital position and quantifing the shortfall. Identifing potential savings sources. Using internal and external benchmarks. Ensuring integration of cost-reduction targets with organizational plans and budget.

Modeling the impact of healthcare reform.

To succeed in today's changing environment, hospitals and health systems must gain new competencies in the areas of physician integration, care management, information systems, service distribution, payer relationships, and scale/market essentiality. Organizations should model the potential impacts of healthcare reform and market forces on volume, capacity, payment, and other variables likely to change. They also should thoroughly examine the cumulative projected impact of strategic initiatives and reform-related changes.

Ensuring affordability of your hospital's strategies.

In light of the economic downturn, hospitals must carefully reassess: Capital capacity and position. Feasibilityand impact of improved operating performance. Strategic position and viability of strategic plans.

Developing and implementing a comprehensive debt management policy.

A debt management policy should be considered an essential part of a hospital's comprehensive approach to balance sheet management. Management and the board should be educated regarding capital structure management benefits and risks. The debt management policy should outline the policy statement and purpose, scope of authority and responsibilities, analytical requirements, approved financial products, and specific debt and derivatives policies.

Joint resolution blending finance and strategy.

When strategic planning and financial planning are disconnected processes, healthcare organizations can rarely accomplish the integrated, analysis-based decision making that ensures long-term access to capital. CFOs need to be actively involved in an integrated planning approach to ensure its success.

Using corporate finance to engineer an organizational turnaround.

Georgia's Southern Regional Medical Center used a proven corporate finance approach to dramatically improve its financial position and integrate its strategic and financial planning. Managers throughout the organization were educated about principles of corporate finance. Reliable cash-flow projections were used to create a multiyear glide path to financial stability. Initiatives were tied to specific time frames and quantifiable financial goals and underwent a standardized review process.