Hospital and health system executives acknowledge that nearly every aspect of the new healthcare economy is changing. However, many organizations still struggle to achieve clinical, financial and operational efficiency with legacy models.

What is needed is a new operating model designed to adapt and respond to the significant changes reshaping healthcare markets.

A recent AHA Market Scan Pioneer report, “ Thriving in the New Health Economy – How Hospitals and Health Systems Can Pivot Operating Models for Sustainability ,” explores the key principles and features of this new operating model. It highlights how two healthcare systems have successfully leveraged this to respond sustainably to emerging market forces transforming healthcare economies. Here are some key findings:

A New Working Model is Needed

A survey by Sage Growth Partners found that senior executives at hospitals and health systems identified two key challenges for 2024 and 2025: reducing the total cost of care and achieving financial sustainability. These priorities are also reflected in how organizations direct their digital and information technology investments. According to a Guidance researchHospital managers listed increased operational efficiency and improved patient experience as the most important benefits expected from these investments in 2024.

To address evolving challenges such as healthcare consumerism, price transparency, virtual care, digital health technologies, hospital-at-home models, diverse care facilities, and new medical technologies, many organizations are adopting new operating models.

As noted in the Trailblazer report, a successful operating model combines two key elements: strategy and operations:

• Strategy: Why are we doing this? Set clear goals and strategic decisions to guide daily operations.
• Operations: What do we do, how do we do it? The new operating model transforms strategy into structure by determining where and how critical work will be performed throughout the system. It ensures that the organization functions harmoniously rather than as a collection of independent parts.

New Working Models in Practice

Main Line Health, for example, transformed its operating model. Main Line, which operates five hospitals near Philadelphia, is dealing with the impact of other hospitals in its market being closed or having reduced services. This market dynamic creates enormous capacity challenges for the Main Line’s hospitals and emergency departments.

To deal with this, Main Line shifted the system’s operating model to focus on solutions to Main Line’s capacity challenges, including significant market changes such as staffing shortages and an aging patient population. Results of the new operating model:

• Virtual Maintenance Operations Center: This virtual care center, which will open in 2021, manages staff recruitment, bed availability and patient transfers in all hospitals. It also centralizes the planning of surgical and diagnostic procedures across all sites.
• Virtual friend program: This program allows a staff member to remotely monitor up to 12 patients at a time and talk to them via microphone to answer questions or address needs.
• Hospital to home program: This initiative reduces unnecessary days in hospital and frees up bed capacity by identifying patients who can be safely discharged home.
• Virtual nursing, physician, and advanced provider programs (APPS): These programs allow nurses to monitor patients remotely and allow physicians and APPs to screen emergency room patients remotely and decide whether patients should be sent home or admitted to the hospital.

SSM, which operates 23 hospitals and hundreds of other care centers in four states, faces the challenge of serving a broad mix of urban, suburban and rural markets, all of which contain issues unique to their communities. To combat this challenge, SSM has implemented a new operating model that allows it to act as a system rather than a collection of disparate providers, positioning the organization to adapt and respond more quickly to internal and external pressures.

“We have chosen to confront these challenges by being more innovative and agile,” said Laura Kaiser, president and CEO of SSM Health. “Working as a unified system on efforts that can best tackle size, scale, talent and expertise helps us respond to growing challenges in our industry.”

The system has implemented a new operating model that produces faster, sustainable, concrete and permanent responses. SSM Health’s customized model is based on Lean management principles for continuous improvement of overall quality.

One operational change focuses on hands-on leadership. Regional and local leaders of the SSM system visit staff regularly to learn about progress toward achieving strategic goals. SSM Health has used this approach to significantly reduce rates of catheter-associated urinary tract infections as well as central line-associated bloodstream infections, to the point of deleting them from the list of active targets. A new goal is to effectively manage patients’ blood sugar levels to help improve clinical outcomes.

Key Takeaway

The traditional tactics employed by many hospitals and health systems are ineffective against disruptions in their markets. These disruptions continue because they are not temporary; they are here to stay and significantly reshape these markets.

Hospitals and health systems need innovative models and strategies that are equally enduring and effective to adapt. They need a more efficient approach to develop and implement these solutions faster, better and at lower cost. The key lies in adopting a new operating model that turns strategy into structure and delivers better results.

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