No hospital or health system leader can afford inaction amid intensifying margin pressures and a rapidly restructuring market.

Employers, retailers, and health plans are all searching for disruptive solutions to bend the health care spending curve. At the same time, mega-mergers and a new wave of vertical integration are creating different-in-kind delivery systems. In the public sector, states and the federal government are picking up cues as to what works—and embedding those mechanisms into provider reimbursement and regulation.

Beyond new threats of disruption, hospitals and health systems face unprecedented financial challenges. Purchasers increasingly seek to commodify the acute care business to drive down prices. At the same time, volumes are stagnating, further eroding the financial performance of hospitals and health systems. Expense growth continues to outpace revenue growth, and operating margins have hit a record low at not‑for-profit hospitals.

As a result, developing a comprehensive margin management strategy—one that includes sustainable approaches to both cost control and revenue growth—must be the central priority for CEOs and their executive teams in 2019.

This is the key to achieving financial viability and securing the strategic flexibility necessary to respond to new market entrants and disruptors. Download this briefing to learn the top 15 insights that will drive health system success in 2019 and beyond.

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Insight #1: In a marked shift, the private sector is now the pace car for change (p. 3).

Insight #2: With a divided Congress, CMS and state governments will drive health policy forward in the near term. (p. 6).

Insight #3: As Medicare not only grows but ages, case mix shifts will exacerbate payer mix challenges. (p. 8).

Insight #4: The private and public sectors are converging on outmigration—facilitated by physicians—as a key to cost savings. (p. 10).

Insight #5: Despite concerted focus on cost control, hospital margins continue to deteriorate—and there’s no end in sight. (p. 12).

Insight #6: Leaders must simultaneously control expenses and grow revenue to attain sustainable margin. (p. 14).

Insight #7: While no expenses are immune to scrutiny, leaders should rebase external spending before confronting labor costs. (p. 16).

Insight #8: The ultimate step in slowing long-term expense growth is the rational expansion—and contraction—of acute care capacity. (p. 18).

Insight #9: Organizations cannot become truly cost disciplined without direct and active intervention from the C-suite. (p. 20).

Insight #10: With limited ability to increase prices, leaders must reduce avoidable revenue erosion through better revenue cycle management. (p. 22).

Insight #11: Meeting revenue goals will require winning increased market share, even in service lines with healthy organic growth. (p. 24).

Insight #12: Successfully growing market share necessitates a new approach to service line planning. (p. 26).

Insight #13: Most health systems will need to diversify revenue streams beyond traditional patient care. (p. 28).

Insight #14: A comprehensive pharmacy strategy can help providers realize both their cost-control and revenue-growth ambitions. (p. 30).

Insight #15: Achieving sustainable margins is ultimately a strategic and mission imperative. (p. 32).

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