One of the most exciting times of the year for us and our colleagues on the Health Care Advisory Board research team is when we conduct our Annual Health Care CEO Survey. It's our chance to learn which of the many issues our members ask us about are especially urgent right now. And all the political uncertainty here in Washington, D.C., made us more curious this year than ever.
We're so grateful that more than 350 members, including 183 CEOs and other C-suite leaders from large health systems, independent community hospitals, academic medical centers, physician groups, and other health care organizations, responded to our survey. Respondents were asked to rate 26 issues on a scale of "A" to "F," with "A" indicating the greatest interest in learning more from Advisory Board about the topic.
We're especially intrigued by the responses from hospital and health system C-suite executives. The top six issues for that group were:
- Improving ambulatory access (57% assigning an "A" grade);
- Innovative approaches to expense reduction (57%);
- Boosting outpatient procedural market share (55%);
- Minimizing unwarranted clinical variation (54%);
- Controlling avoidable utilization (49%); and
- Exploring diversified, innovative revenue streams (48%).
Let's take a closer look at what these results reveal.
Observation #1: Health care executives want to get creative about growth in a consumer-driven market
It's no surprise that growth-related topics poll well; we see that every year. But what stood out to us was the very strong interest in business lines outside of inpatient acute care.
Whether it's improving ambulatory access (the highest-scoring topic) or exploring diversified revenue streams, executive focus is shifting as more and more leaders recognize that consumerism in health care is as much of an opportunity as it is a threat. To understand exactly how notable this year's results are, consider that last year, only 40% of executives were extremely interested in learning more about boosting outpatient market share, while this year 55% were. Interest in boosting inpatient share also grew, but far less dramatically.
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Percentage of 183 C-suite respondents assigning an "A" grade
Observation #2: There's a hunger for new opportunities to reduce cost—and a growing recognition of where those opportunities lie
The results reflect two realities about cost control that we've observed in our broader research for some time.
First, it's getting harder and harder to improve margins through familiar tactics like labor force reductions or group purchasing of supplies. That's why so many executives expressed strong interest in innovative approaches (the second-highest scoring topic).
Second, we know that the next big wave of expense reduction opportunity will come from improvements in clinical processes and pathways themselves. This is a big focus of the Cost Control Atlas in our recent Finance Leader's Resource Guide. We're very encouraged to see such interest in reducing unwarranted variation and controlling avoidable utilization of health care services (the third- and fourth- highest scoring topics).
Observation #3: No matter what their focus, many provider organizations risk forgetting the other side of the coin
It's important to us that we know not just what interests you and your colleagues, but also where you are spending your time. That's why we added a new question to our survey this year: We asked how much of your organization's overall efforts in 2017 are split between revenue generation and cost control activities.
Respondents from all types of organization were more likely to report being "mostly focused" or "overwhelmingly focused" on revenue growth than to report being so on cost control. That said, about a quarter of health systems and hospitals within health systems are expecting to be "mostly focused" or "overwhelmingly focused" on cost. What's more interesting than which way the balance is tipped, though, is the rarity of organizations that report only "slightly more" focus one way or the other. Well less than half of respondents—and less than a quarter of hospitals in health systems—are expecting a relatively balanced approach to cost and revenue improvements.
How much of your organization's effort in 2017 do you expect to be focused on generating incremental revenue, and how much on reducing expenses? (n=365)
Perhaps that's an encouraging sign of strategic clarity. But we worry that long-run success is going to demand both outsized growth and superior cost performance given the environmental pressures facing hospitals and health systems today.