The Towers Watson survey, Readiness for Change: New Directions for the Hospital Industry, found that a majority of respondents anticipate significant changes in their operations when the new legislation is fully implemented. For example, fully 93% expect cuts in reimbursement levels, and 67% anticipate a shift in the payer mix, with fewer private payers. Just over three-quarters (77%) agree they will need a wider range of skills among their staff. And three-quarters (75%) expect a higher ratio of outpatient to inpatient care, as well as an increased need for primary care capabilities.
“A perfect storm of forces is hitting the hospital industry all at once,” said Heidi Toppel, a Towers Watson senior consultant. “Industry executives have no illusions about the extent and magnitude of the forthcoming change. But the scope and complexity can be daunting, especially since hospitals have to rethink and refine core business and operating processes while continuing to deliver quality care to the communities they serve. Many executives recognize the transformation required to meet the vision of multidisciplinary accountable care will ultimately help improve health outcomes and reduce costs. However, the path from the current to the enhanced state won’t be a smooth one in the short term.”
The survey findings demonstrate a consistent push/pull between a business-as-usual mindset, and the need for fresh thinking and approaches to delivering care efficiently and effectively. In terms of their top three greatest business challenges over the next two to three years, respondents cited managing costs (72%), improving quality of care (56%) and managing changes in the payer mix (25%). Far fewer, though, cited collaborating with local providers on community health and wellness services (18%), arguably a critical focus for the future. On the other hand, most respondents (90%) saw customer service (i.e., patient satisfaction) as a far stronger competitive differentiator in the next three years than it is today, in keeping with a future that will emphasize positive patient outcomes on many levels.
Talent Gaps Loom
The survey found that most respondents aren’t currently experiencing serious labor shortages, and believe turnover and retirement are ideal or manageable today, although two-thirds reported slight to moderate shortages of physicians and nurses. However, most respondents anticipate additional shortages over the next two to three years, with the biggest gaps expected in patient-facing roles. More than two-thirds of respondents (70%) expect shortages of bedside registered nurses to increase moderately to significantly, while more than half expect increased shortages across a range of roles, from nurse practitioners, to physicians, to allied health professionals, to clinical technicians. These projected shortages help explain why, looking ahead two to three years, respondents cited concerns about staffing risks to a far greater extent (71%) than they did either financial risk (52%) or operational risk (39%).
“We expect a sizable percentage of experienced physicians and nurses will likely retire over the next decade, potentially creating a diminished supply of clinical staff down the road,” said Toppel. “The danger is that today’s glut of recent medical and nursing school graduates could mask this looming problem, so hospital HR executives can’t take their eyes off the talent management ball if they want to ensure they remain competitive in the labor market. What’s more, there can be advantages for hospitals in using this current period of relative labor market calm to prepare young, new clinical hires for the challenges of the next few years, assuming more experienced clinical employees are available for mentoring.”
Interestingly, most respondents expressed the least concern about the availability of executive talent, with just under three-fourths anticipating no change in the supply of hospital executives and administrators. The survey report notes that basing predictions of future needs on present circumstances could be misleading. Leadership competencies needed for the future will be very different, and savvy hospitals will need to start the process now of defining the leadership profile for the future.
“Given the industry’s legitimate economic concerns, hospitals are about to face some of their toughest challenges. To compete and flourish in this new environment, they will need to develop strategies for closing gaps in capability, staffing and structure,” said Toppel.
About the Survey
The Towers Watson survey, Readiness for Change: New Directions for the Hospital Industry, was conducted in June and July of 2011, and includes responses from human resource executives at 106 hospitals and health care systems of all sizes throughout the United States. Fifty-seven percent were from hospital systems, and 31% were from stand-alone hospital