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  1. The Big Picture: Hospitals in a Volatile Healthcare Environment James Bentley, Ph.D. Senior Vice President for Strategic Policy Planning American Hospital Association Washington, DC

  2. Today’s Major Issues • Financial stability • Workforce • Regulatory mandates • Safety and error reduction • Professional liability

  3. Hospital Financial Overview • 1/3 operating at a loss on total bottom line • 1/3 operating at a loss on patient care but achieving minor margin on non-operating income • 1/3 achieving a margin on patient care and total bottom line • Financial market results are a big unknown for 2002

  4. Hospitals face severe workforce shortages… Vacancy Rates for Selected Hospital Personnel 2001 Source: The Healthcare Workforce Shortage and Its Implications for America’s Hospitals, First Consulting Group, Fall 2001

  5. The labor shortage will reach crisis proportions unless action is taken. NEW DATA 2,900 Demand 2,700 2,500 Shortageof 800,000nurses by 2020 2,300 FTEs (in thousands) 2,100 Supply 1,900 1,700 1,500 Source: Bureau of Health Professions, National Center for Health Workforce Analysis, Projected Supply, Demand, and Shortages of Registered Nurses: 2000-2020, released July 2002 2000 2005 2010 2015 2020 Forecast of Total RN FTEs vs. Requirements 2001-2020

  6. …and skyrocketing professional liability premiums. Percent of Hospitals with a 10% or Greater Increase In Professional Liability Premiums 2000-2002 Percent Change in Premiums Source: AHA/ASHRM Survey of Hospital Experience with Professional Liability Insurance.

  7. Change Drivers • New science: new knowledge base • Coverage/financing: employer role • Demography: aging, diversity of society • Consumerism: service expectations • Workforce supply: long-term shortage • Community organization: virtual • Societal decision-making: market-based • “Niche” providers: Loss of profitable

  8. Greatest Risk • Small volume hospitals • Can’t make the utilization underlying current payment approaches • High uncompensated care hospitals • Mandate for care not matched by mandate for payment • High debt load hospitals • Financial inflexibility

  9. Strategies for Hospitals • Retain hands-on care as a core purpose • Continue 24x7x365 care • Reflect distinctive local characteristics • View institution as programs, not facilities • Focus on consumers • Develop information service strategy • Create own workforce • “Partner” for capital • Encourage innovative leadership

  10. Changing Hospital Roles • Backstopping the system: 24x7 • Increasing intensive care • Increasing emergency care • Terrorism preparedness • Rural hospitals: providing the continuum of care