Wednesday, November 7, 2012

Community Hospitals: Survival Strategies


Referring to “Your strategy needs a strategy” article, Martin Reeves et al. mention that during the times when all the strategies fail, there rises a need for devising a strategy to implement other strategies. This kind of strategy is indicated as a survival strategy. A survival strategy basically involves a defensive approach in which the focus changes from growth, increasing profits and revenues to cost cutting, capital preservation etc. However, this strategy may not ensure a long term solution but can surely be used as a tool to gain some time in middle of the crisis and prepare and adapt for the anticipated future environmental changes.

Building on the above mentioned article, I would like to talk about the survival strategies that can be used in the community hospital space referring to the recent analysis done by Navigant Consulting firm. The uncertainty in the healthcare industry has increased due to recession and healthcare reforms that have been taking place lately. In the midst of increasing unpredictability, the community hospitals have found themselves struggling with going forward without restructuring their current strategies which no longer seem to be useful and viable. 

Doing more with less has become the need of the hour and new unconventional strategies are being considered to help the situation. Some of these new strategies include consolidation of smaller hospitals into larger systems giving the smaller entity a benefit of reduced capital costs and a better negotiating power in front if payer and suppliers, membership substitution which is basically an affiliation of a smaller hospital with the bigger one in which the balance sheet of the smaller one rolls into the bigger one’s consolidated balance sheet that results in receiving of services from the larger hospital at a reduced cost. There is a hope that these new strategies will help in decreasing economic inefficiencies of the operations of the organizations in crisis but again there is no guarantee that these strategies will work in every case. That being said, the point that the author is trying to make is that there can be no defined set of strategies that can work in all circumstance and hence anticipation of future and being proactive and creative in continuously devising new strategies that will help in adapting to the new environment faster is going to be the latest trend. Now the question really is how beneficial will this we have to see how long does that last.

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