Over the past several years healthsystems, hospitals, physicians and integrated delivery networks coped with many amazing pressures. The changing approach to business development, pricing pressures, revenue cycle needs, HIPAA compliance, conflict management, coordination within hospitals and between hospitals and their medical staffs, and middle manager development … all these affected the health of healthcare enterprises. They are the places where new strategic and tactical challenges must be managed, if our health system, such as it is, will succeed.

HIPAA Compliance & Information Technology (IT) - Check your IT strategy

1. Hospitals that are a part of systems or shared services organizations, or larger than 150 beds, usually have internal resources to provide for their own HIPAA development and employee training. But the degree of commitment to improved IT is "all over the place" in terms of taking advantage of the promise of HIPAA to "boil out labor intense functions" and better integrate components of "the system." Internal capital is tight and CFO's are cautious with external capital, despite low interest rates. Almost every health system prefers investments in clinical technology to raise acuity levels and revenue, over investment in administrative IT. Leading organizations will satisfy HIPAA requirements and make IT investments, if needed, because Managed Care Organizations (MCO's) have made electronic commerce a requirement of participation. The Consumer Choice movement and IT-savvy Baby Boomers are producing a push for the same degree of responsiveness from healthcare as they have obtained from Amazon.com. Healthsystems are just beginning to fully acknowledge the scope of the need in this area.

2. Physician groups with more than five, or so, physicians have plans in place or underway to design new procedures, achieve HIPAA compliance and meet April 2003 training deadlines. However, there are still a large number who have almost no IT and limited capacity to acquire the IT. Many physicians are cautious about the use of internet facilities to communicate with patients; and, relative to small businesses, few physicians have websites. Younger physicians tend to be the ones experimenting with e-commerce because it offers ways to be responsive to customers, yet allow physicians to "have a life." [At least that's their hope]. The next two years will tell the tale. Stay in touch with your medical staff, they often move faster than the healthsystems -- the symptoms of change are everywhere for physician practices or physician-led joint venture enterprises.

3. Smaller organizations or components of healthsystems may have no resources and may not have even begun to respond to HIPAA and the other trends. Often it is hospital medical staff members who have expected that the hospital would prepare them for HIPAA, not realizing that their practices also must be compliant with a set of unique procedures. Procedures to deal with Business Associates, Managed Care Organization (MCO) and renegotiation of contracts, HIPAA training for their employees, etc. In rural settings, the Federal Government may yet fund more Technical Assistance Centers that help rural health networks comply with HIPAA and acquire IT (among other things). IT is needed to enable improved labor productivity and connectivity, as well as the perception of "systemness." Work-from-home professionals are increasingly moving to rural areas and creating a form of demand not seen by these rural systems in decades. The rural systems are composed of physicians, public health clinics, small hospitals, Critical Access Hospitals and other delivery system components. Many times they are more collegial (integrated) than their urban counterparts. Small for-profit companies are carefully eying these markets for opportunities.

4. A diminishing few still see other priorities as, "more important." Closures or buyouts are still common and will continue for several more years.

Organizational resources for change management, expense management

5. More limited resources than ever. Many organizations, in recent efforts to reduce expenses, "skinnied" themselves to the point that they are stretched thin just to manage day to day operations and, perhaps, a few, select special projects. For these organizations to organize around key issues, they must either lay aside one priority to deal with another, delay an action (hoping that it does not "come back to bite them"), or find an outside source to temporarily expand available skill sets. A clear vision of the organization's potential will help set resource priorities. And, more and more well-trained and experienced managers are available in the market to temporarily fill needs for special projects or consulting.

6. Empowering those who do the "blocking and tackling." The operation of hospitals and other complex medical organizations have had to be delegated to middle managers, to free senior-level people to focus on "steering" the enterprise, managing change, finding resources and solving problems. Of course, middle managers have always been the key to operations. They control expenditures that significantly impact year-end financial position. Yet, they often lack formal preparation as managers, having risen from technical ranks to positions of resource control. In our zest for expense reductions we shelved team building efforts and formal management development. This is a perennial problem that must be addressed to maintain organizational momentum. Web-based and traditional sources of outside training are more cost-effective and more available than ever before.

Organizational insecurity & the need for conflict management

7. Insecurity and conflict are more prevalent. The economy and recent spate of layoffs and downsizings have done nothing to reassure front line staff, nurses or middle managers that their positions are secure. Staff turnover rates are rising for many organizations. As a consequence, we have observed an increase in overt conflict across departments or functions, between hospitals and their medical staffs, and between delivery systems and MCO's. Sometimes these kinds of pressures occur in only one of these segments; but, rest assured, conflict must inevitably occur if organizations will be successful with innovatively responding to change, and to new opportunities and regulatory or market challenges. Change creates reasons for conflict; and, the speed of change increases the intensity of conflict. In turn, unmanaged conflict yields key skill losses and a loss of traction in the market. A communicated vision, visible leaders and acquired skills in conflict management are good tools for this problem.

Consumer Choice (or defined contribution) health plans are not here yet, but will be within two years, and will heavily saturate the market by 2007.

8. Who is the customer? The rising tide of employer unrest with cost is pushing us toward Defined Contribution or Consumer Choice Health Plans (CCHP's). Consider these points: