Adjusting screws for successful restructuring
How the turnaround in hospitals can succeed.
German hospitals are in poor condition. And this is not just since the pandemic:
The specter of large-scale hospital closures has been looming for at least 15 years. “During the first wave of Corona, the lump-sum payments for keeping beds available had an effect on many hospitals, so that a large part – economically speaking – came through this time quite well,” explains Prof. Christian Wallwiener, Managing Director at WMC Healthcare in Munich. But as early as during the second wave in autumn, only a small proportion of clinics benefited from these compensation payments. “We therefore share the concern of many other experts that a large wave of insolvencies will roll towards German clinics at the latest by the end of this year.”
Numbers, data, and facts are the basis for analysis
The good news: There are several adjusting screws that can be turned to achieve an improvement in results. Which structural and operational levers need to be used in individual cases to successfully restructure a clinic is very individual. “From the service portfolio to internal processes to the region in which the hospital is located – there are numerous aspects that we consider as part of an initial analysis. Many hospitals do not have sufficient transparency about their performance,” explains Burkhard Holz, who as a senior manager at WMC accompanies many hospitals through restructuring processes. Initially, the analytics experts of the management consultancy work their way through mountains of numerical data. They bring together the most important key figures, e.g., from human resources, accounting, and service provision. “Weaknesses and problem areas are suddenly concretely on the table,” explains Holz, “and opportunities arise: In addition to some quick wins that can quickly leverage potential and utilize synergies, it becomes clear how the concrete path to a sustainably economically secure future could look.”
Successful restructuring requires broad consensus
Before a groundbreaking decision is made, various scenarios are conceptualized, discussed, and evaluated. And this across all professional groups and management levels. At the end of this often challenging process, there should be a consensus as broad as possible. “Only if a clinic as a team embarks on the rocky road of reorientation together, the supporting organization fully backs it, and the supervisory board and other important committees support the decision, can a restructuring succeed,” Wallwiener shares his experiences. This is all the more important when it comes to consolidating or relocating sites, for example.
Adjustment of capacities
In the first step of a restructuring process, medical capacities are adjusted to meet demand. “We take into account a variety of factors,” explains Holz. Trends in healthcare, for example, would be included as well as demographic developments. “In the end, we know how many beds are basically required to meet the care needs in the catchment area.” Then the fine-tuning begins, where the analysis goes much deeper in various areas. For example, by improving processes around OR management, e.g., in patient scheduling and preparation, the utilization of operating rooms can be improved and the number of operated rooms potentially reduced. Another starting point is the central emergency department: Introducing first-view concepts, for example, reduces waiting times, selects patients who need to be admitted for inpatient care, and thus increases the conversion rate. Joint ward management and centralized occupancy control also help save time. By aligning discharge times before 12 noon and adjusting actual length of stay to InEK length of stay, capacities are freed up for increasing case numbers and thus significant additional revenue potential. “The beautiful thing about this is that more efficient processes not only increase economic efficiency but also significantly increase satisfaction among employees and patients,” emphasizes Wallwiener.
Bundling of service offerings and infrastructure
If a hospital group or association is represented with multiple hospitals in a region, it makes sense to develop medical focus areas and redesign offerings. Specialist departments are bundled across locations. Existing relationships with referring physicians are intensified and the network is continuously expanded. On one hand, this leads to higher case numbers, which may be necessary for surgical procedures subject to minimum volume requirements. On the other hand, it saves on duplicate provisions for cost-intensive medical technology. For example, an MRI can be much better utilized. Business areas such as accounting, human resources, or even the kitchen work more efficiently when organizationally merged. “Employees also benefit from this as soon as the boundaries between locations soften,” says Holz. “Peak workloads can be cushioned, and site rotations and exchange opportunities offer chances for further development.”
What sounds so simple is unfortunately often a lengthy undertaking in practice. Those who want to make long-term changes need operational support. “We don’t leave our clients alone with the implementation,” Wallwiener clarifies. Regular working groups, on-site inspections, interviews, and reporting with the most important key performance indicators are just as much a part of it as training, e.g., for improving documentation and coding, or assistance in preparing documents, e.g., as part of liquidity planning. If there are no electronic tools on site that facilitate work and prevent friction losses, WMC provides them. The requirements are usually so complex that more than classical management consultants are needed. “Only when the bundled expertise of medical staff and nursing, IT experts, clinic managers, programmers, controllers, and financial experts comes together do all the gears mesh and the path to a financially stable future begins.”