At the Margins

Want to improve your margin performance? We can help.

by Eric Fontana and Trevor Goldsmith

Hospitals and health systems feeling margin pressures are not alone. Moody's recently predicted that not-for-profits health systems' operating cash flow will shrink by 2% to 4% over the next 18 months. Indeed, in an environment of rising costs and uncertain revenue growth, there are no shortage of reasons for flagging margins.

But although the cost and revenue challenges are industry wide, their exact impact can differ significantly from hospital to hospital. To define and implement an effective margin strategy, hospitals need to understand the root causes of their margin performance. 

To facilitate a proactive margin strategy, the Advisory Board has created the Margin Improvement Intensive to help organizations assess performance both at the individual facility and the system level. The Margin Intensive relies upon the most up-to-date data sources—including CMS's Standard Analytic Files claims databases, MedPAR, Medicare cost reports, and Hospital Compare data sets—to analyze and benchmark performance relative to the industry or a hand-selected cohort of similar organizations.

The 3 elements of the margin improvement intensive

1. Customized data diagnosis

The Margin Improvement Intensive begins with a review of your performance across a broad set of margin-related metrics including: direct costs, revenue, contribution profit, pay-for-performance, financial indicators, surgical mix, short stay cases, patient safety/infections, patient satisfaction, PACT revenue at risk, spending efficiency, and more.

2. Executive workshop

One of our expert facilitators will come on-site to deliver the results of your customized data diagnosis and present The Cost Control Atlas, which contains our latest perspective on cost reduction best practices, based on our conversations with hundreds of hospitals and health systems. The workshop is an excellent opportunity for hospital leaders to initiate a strategic review dedicated to strengthening financial performance.

3. Targeted resources

We will also help you access a library of Advisory Board best practices and research specific to your own research memberships that can be incorporated into your margin strategy.

For additional information about the Margin Improvement Intensive, including how to schedule a presentation for your organization, please contact us.


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