Delivering the best patient outcomes at the lowest possible cost is a tough prescription at any time, but especially now. EvenBecker’s Hospital Review recently posted the pressing question, “How do hospitals save costs while preserving patient safety and quality of care?” This means that hospitals must be much more precise about where the money comes from and how it flows through the system – both the revenue streams and the costs.
Time to raise the level of business literacy – STAT!
The lack of workforce business acumen is understandable in hospitals, which have focused on developing functional and technical experts – rarely experts on the business side. As a result, most lack even a foundational understanding of the financials and what it takes for a hospital to keep its doors open.
Business acumen, simply defined, is an understanding of what it takes for hospitals to make money. It includes financial literacy, the understanding of the numbers on financial statements, as well as an understanding of the strategies, decisions and actions that impact those numbers.
Increased business acumen at management and key employee levels can allow for big-picture thinking – thinking that inspires better, more strategically aligned, day to day decisions.
Let’s face it: employees with business acumen are better prepared to act in ways that positively affect margins, cash flow and patient outcomes because they:
- Understand the story behind the hospital numbers, recognizing opportunities to help the bottom line. (See Becker’s recent article titled “8 Out-of-the-box Ways Hospitals Can Cut Costs”).
- Recognize the realities of the current healthcare landscape and how they affect the hospital’s abilities to balance mission and margins.
- Understand that tough economic times can require that hospitals make difficult decisions in areas like staffing, supplies and facilities.
- Grasp the “why” behind new initiatives and how they will help keep the hospital strong.
- Take a big-picture systems view of their jobs and how their daily decisions and actions contribute to the hospital’s top and bottom line success.
Recently, when managers at a client hospital participated in Paradigm Learning’s approach to business acumen development, including its core customized learning program Zodiak®: The Game of Business Finance and Strategy for Healthcare Organizations, they reported the following actions taken back on the job:
- Enthused about her role as financial steward, one nurse manager put price tags on supplies. The result? When she and her team realized the cumulative impact of wasted supplies, like syringes, they were able to achieve substantial savings. News of their successes spread, and other departments followed suit.
- After experiencing the Zodiak Healthcare session, a new manager at St. Joseph’s Hospital-North is taking a hard look at her budget and what she can do to improve the bottom line in her department. She is making improvements in her stockroom, working alongside her supply managers to clean out items that haven’t been used in a year (things that weren’t being used at all). She is now reassessing all of her stockrooms and how her staff is using them.
- In another hospital, administrators were feeling frustrated and overworked. It was an “aha” moment when they uncovered a culprit they could fix: Bills sent to wrong addresses. Once they calculated the impact of these clerical errors on cash flow and reputation, they worked quickly to install a better process. This victory increased their confidence and inspired them to make other improvements.
When managers and key employees become aware of ways to contribute to the bottom line and commit to taking actions in their departments, hospitals can reap the benefits of reduced costs without sacrificing quality and patient care.
The development of workforce business acumen can help hospitals achieve both mission and margin – linking patient and financial health.