Health care providers such as hospitals — particularly the more enlightened ones — started to reform years prior to the Patient Protection and Affordable Care Act (PPACA). Although the law crystallized the industry’s direction, health care systems faced pressure to reinvent themselves long before the act. This reinvention has not only affected the delivery model but also the human capital requirements within the health care system.

“There’s a big shift to outcome-based rewards as opposed to transaction-based rewards,” says Rob Rogers, a principal and health care industry leader at Findley Davies, Inc. “In other words, what is the quality of care provided as opposed to how many units of X were done in the fiscal year.”

Smart Business spoke with Rogers about the outlook for hospitals and health systems, and what this means for business owners.

How will reform affect revenue and other financials for hospitals and health care providers?

The topline or gross revenue for health care systems — which can either be an integrated network comprising multiple hospitals, physicians, clinics and outpatient treatment centers, or an independent community hospital — is going to jump. In particular, hospitals will have more patients as result of 30 million people now being covered under an ‘insured’ delivery system. Providers face the challenge of bolstering staff while facing a shortage of nurses and physicians.

Despite volume increases, net revenue will come under a lot of pressure as reimbursement levels from insurance carriers and Medicare and Medicaid continue to decline. Health care providers are being forced to scrutinize operating expenses to ensure they are providing care as efficiently as possible.

How will patient care be impacted?

More focus on clinical outcomes is one good thing occurring through reform — not necessarily the governmental legislative act, but the whole process. The health care system has recognized, based on internal pressure and pressure from employers covering health care costs, that patients and plan sponsors aren’t interested in paying for the volume of diagnostics. The reform focuses on keeping people healthy. If there are health problems, then the attention shifts to measuring outcomes such as the success rate of treatments, morbidity rate, length of hospital stay, patient satisfaction, etc. Health care systems must learn to cope with the continuous challenge of providing the right mix of care while, at the same time, getting paid for it.

What kind of consolidation and collaboration do you expect?

More collaboration among providers and consolidation of various related-care entities have already started. Some think only large health care systems will be able to operate in this new environment because they have enough volume to manage the margins better. However, while community hospitals will continue to operate independently, there will be pressure for them to partner with other community hospitals or to create alliances with the larger hospital networks.

Physicians are also building more partnerships. In 2010, for the first time, more physicians were employed by organizations such as hospitals and other related entities than were in private practice, though many independent physician groups exist in Ohio.

Health care reform works to eliminate silos of treatment. So we’re seeing the development of an integrated delivery model, with numerous entities working together under one umbrella to provide more efficient and better quality care. To remain competitive, physicians are creating alliances with patient care providers such as hospitals and nursing homes.

How will the operating procedures for health care providers differ?

Health care systems are taking a more proactive role in physician and nurse development and recruitment by providing financial assistance to university students in exchange for employment arrangements. With the assistance of experts to provide strategy, hospitals are looking at how they attract, retain and reward physicians, senior leadership and nurses to ensure staff is highly motivated and delivering quality care.

Most health care systems and hospitals are not-for-profit, tax-exempt organizations. As pressure increases from the public, Congress and state legislators, most health care providers are paying close attention to transparency in everything they do from audits, executive compensation and governance. More and more tax-exempt organizations are operating like public companies, which must comply with Sarbanes-Oxley requirements.

There isn’t a more public entity than a tax-exempt organization — the general public is the taxpayers. Rules governing the reasonableness of executive compensation and benefits under intermediate sanctions statutes are creating added pressure on health systems to ensure transparency and objectivity when dealing with executive rewards.

How might these changes impact business owners who provide health care plans?

The reform, apart from PPACA, is going to be mostly positive for business owners. While there may be additional costs associated with reform, the system will be more efficient with more focus on preventive care and wellness, which are steps in the right direction. There will be more integration with fewer silos of care. There’s more concern with helping the patient get from A to B to C without jumping through hoops. It will be less costly, more efficient and the outcomes will be better, which will make employees healthier.

The health care industry is rapidly changing. As health care providers work to deliver more efficient, better quality care, employers and employees both should be able to reap the benefits.

Rob Rogers is a principal and health care industry leader at Findley Davies, Inc. Reach him at (216) 875-1926 or rrogers@findleydavies.com.

Insights Human Capital is brought to you by Findley Davies Inc.

Published in Akron/Canton

As nonprofit facilities continue to face increasing financial challenges and uncertainties, executives are tapping and expanding their philanthropic activities to provide funding for vital construction projects, advanced health education, critical patient programs and unique medical technologies.

To learn more, Smart Business turned to Cecilia Belew, president of Saddleback Memorial Foundation in Laguna Hills and San Clemente, and Paul Stimson, director of Orange Coast Memorial Foundation in Fountain Valley.

Why is philanthropy so important?

Nonprofit hospitals typically began when concerned citizens raised funds to ensure local access to high-quality health care. Over the years, donors continued their support, helping add the programs, services and facilities necessary to keep pace with medical advances and innovations.

These are your community hospitals, and your philanthropy makes a difference.  Even in difficult times, we are witnessing a larger number of philanthropic friends making decisions based on the fundamental reason people give — to make a difference and ensure the best health care is available close to home. To protect and enhance this kind of care, ongoing philanthropic investments are critical.

How does it impact hospitals?

Philanthropy elevates a life of success to a life of significance. We see people making that choice every day: children raising $12 for cancer research through a lemonade stand, individuals that fund charitable trusts and annuities making outright major gifts, board members who provide expert leadership, the hundreds of volunteers and organizations that sponsor fund-raising events. Many choose to fund endowments that provide sustainability to critical patient programs and continuing medical education.

Every gift we receive has a story. All stories begin with a philanthropic friend, continue through the work of our health care team and then impact the lives of our patients and our communities. Every week, premature babies are saved, elderly patients comforted, illnesses diagnosed, bones mended and lives saved — thanks to the generous philanthropy of individuals, corporations and private foundations in our caring communities.

Philanthropic donors and organizations are vital partners in achieving success at Orange Coast Memorial and Saddleback Memorial Medical Centers. This is especially true during a time when hospitals are challenged in securing the newest technology and in expanding programs to meet the needs of the community. Thanks to the countless philanthropic friends, our hospitals are able to add the programs, services and facilities necessary to keep pace with the latest advances. And all our philanthropic friends appreciate the value of having extraordinary patient care today and in the future.

What are some examples?

Our decades of offering compassionate, quality care are based on the generosity and expertise of extraordinary people. Orange Coast Memorial Foundation supported development of the new six-story Patient Care Pavilion that provides access to some of the most respected physicians and advanced diagnostic and treatment facilities for cancer, surgery, obesity and imaging services at Orange Coast Memorial. Recent gifts are helping fund the new cardiac rehabilitation center, as well as nursing education.

Saddleback Memorial began when Leisure World residents, envisioning a world-class hospital in southern Orange County, raised $500,000 and the developer Ross Cortese donated nine acres. Opening in 1974, it was the first community health facility serving the growing Saddleback Valley. Since opening, Saddleback Memorial has received over $200 million in philanthropic gifts. These funds supported construction of Meiklejohn Critical Care Pavilion, the Women’s Hospital and the numerous programs, services and medical technologies at the Laguna Hills and San Clemente locations.

MemorialCare Health System does its share to help our communities. During the last fiscal year, our medical centers provided nearly $150 million in charity care and community benefits. We are also active in our communities, having supported organizations like March of Dimes, Susan G. Komen for the Cure and the American Heart Association.

We value the philanthropic funds that are entrusted to us by our donors and grantors. The gifts, grants and bequests given to our foundations help distinguish our hospitals as top medical institutions. We are confident that the philanthropy which built and sustained both Saddleback Memorial and Orange Coast Memorial as well as our many Centers of Excellence will continue, thanks to the commitment of our caring communities.

How can employers help?

We appreciate that businesses continue to leverage their resources to support their communities, even in difficult times. They understand their unique position as corporate citizens in taking a proactive role to making a difference and encouraging their employees to do so as well.

Orange County employers and their work forces help us ensure high-quality health care through a number of philanthropic channels — individual gifts, corporate grants, payroll deductions, endowments, estate and planned gifts, corporate gifts,  in-kind gifts, tributes, fund-raising events, sponsorships and much more. Even as businesses continue to be impacted by an uncertain economy, many of them give back by supplementing charitable giving with longer-term pledges as well as gift commitments.

Cecilia Belew is president of Saddleback Memorial Foundation in Laguna Hills and San Clemente. Paul Stimson is director of Orange Coast Memorial Foundation in Fountain Valley. The not-for-profit MemorialCare Health System includes Long Beach Memorial Medical Center, Miller Children’s Hospital Long Beach, Orange Coast Memorial Medical Center in Fountain Valley and Saddleback Memorial Medical Center in Laguna Hills and San Clemente. For additional information on excellence in health care, please visit memorialcare.org.

Published in Orange County

The role of philanthropy at not-for-profit hospitals has never been more critical. With the increasing financial challenges and uncertainties, health care executives are expanding their philanthropic activities to provide funding for life-enhancing research, vital construction projects, unique medical technologies, critical patient programs and advanced health education.

To learn more about hospital philanthropy, Smart Business turned to Jim Normandin, president of the Memorial Medical Center Foundation at the Long Beach Memorial Medical Center and Miller Children’s Hospital Long Beach.

How has philanthropy supported hospitals?

Not-for-profit hospitals can benefit when concerned citizens raise funds to ensure local access to high-quality health care. Through the years, many donors continue their support, helping hospitals add the programs, services and facilities necessary to keep pace with important medical advances and innovations.

Even in these challenging times, we are witnessing a larger number of philanthropic friends making gifts based on the fundamental reason people give — to make a difference and ensure the best health care is available close to home.

Why do individuals and organizations donate?

Philanthropy elevates a life of success to a life of significance. We see so many people making that choice every day, like the children who raised $787 for cancer research through a lemonade stand and the individuals funding endowments that provide sustainability to critical patient programs and continuing medical education. Every gift we receive has a story. Recently, a grateful patient, who also is a hospital volunteer, made a philanthropic commitment for heart research so more patients in the future may benefit. Her gift combined with others allows the health care team to further impact the lives of our patients and our communities.

Every week, premature babies are saved in our world-renowned neonatal intensive care unit, patients comforted through our palliative care team, illnesses diagnosed and treated, bones mended and lives saved — thanks to the generous philanthropy of individuals, corporations and private foundations in our caring communities. We believe that all of our philanthropic friends appreciate the value of having extraordinary patient care today and in the future.

What’s been the impact at your facilities?

When Long Beach Memorial opened in 1907, it was thanks to the group of physicians and community members who each donated $200 to begin what is today the West’s second largest community hospital campus. Community philanthropists were responsible for the beginning of what is now among the nation’s largest children’s hospitals when the late Earl and Lorraine Miller’s generosity helped to build Miller Children’s in 1970. Their foundation continued with a lead gift of $5 million for the new $198 million Miller Children’s Pavilion and affiliated clinics, which opened with $25 million in new philanthropy.

The Foundation Board is appreciative of the philanthropic funds entrusted to us by our donors and grantors, which help distinguish our hospitals among the top medical institutions in the world. Memorial Medical Center Foundation also has 139 endowments that provide annual funding for patient programs, continuing medical education and clinical research as well as medical technology. We are confident that the philanthropy that has built and sustained Long Beach Memorial and Miller Children’s and their Centers of Excellence for over a century will indeed continue. And thanks to the commitment of our caring community, during the last five years alone, the Foundation has given our two hospitals nearly $60 million to provide that extra measure of care.

Our hospitals do their share to help our communities. In the last fiscal year, we provided more than $100 million in charity care and community benefits. We are also active in our local communities, working in partnership with March of Dimes, American Heart Association and Habitat for Humanity.

How can employers help?

We appreciate that businesses continue to leverage their resources to support their communities, even in difficult times. They understand their unique position as corporate citizens in taking a proactive role to making a difference and encouraging their employees to do so as well.

Employers and their work forces help to ensure high-quality health care through many philanthropic channels — individual gifts, corporate grants, payroll deductions, in-kind gifts, fund-raising events, sponsorships, endowments and more. Many are also supplementing charitable giving with longer-term pledges as well as matching gift commitments made by their employees.

Our Foundation’s ‘Partners in Excellence,’ with more than 100 members, is a great example of how employers come together annually to support their community. These resilient business owners and executives contributed more than $1 million to fund needed equipment for both Long Beach Memorial and Miller Children’s Hospital Long Beach.

We are always grateful to our donors whose philanthropy makes a difference.

Jim Normandin is the president of the Memorial Medical Center Foundation at Long Beach Memorial Medical Center and Miller Children’s Hospital Long Beach. The not-for-profit MemorialCare Health System includes Long Beach Memorial Medical Center, Miller Children’s Hospital Long Beach, Orange Coast Memorial Medical Center in Fountain Valley and Saddleback Memorial Medical Center in Laguna Hills and San Clemente. For additional information on excellence in health care, please visit memorialcare.org.

Published in Los Angeles