Hospitals will need to cut their costs 20 to 40 percent in the next 10 years, a nationally recognized health care consultant said.
The cost-cutting imperative, said Quint Studer, comes down to simple math: U.S. hospitals on average currently work with a 2.2 percent operating margin. Factoring in anticipated reductions in reimbursement payments in coming years, that 2.2 percent positive margin will be a negative 16.8 percent margin by 2021.
To stay in the black, he continued, hospitals will have to streamline or eliminate some services, drive out waste and become more consistent in everything they do, from the care they provide to internal communications.
One more thing, he told several dozen hospital managers and executives Thursday at the Hospital Council of Western Pennsylvania offices in Warrendale:
"We have to help leaders feel OK about removing people from the organization."
Mr. Studer, who heads the Florida-based Studer Group, said a survey of more than 26,000 health leaders found that, on average, those leaders described 8 percent of their workers as "underperformers" -- although about half the time, the worker's poor performance had not been documented or tracked.
"You're making patients get care from people they should not be getting care from," he said.
He also emphasized the need for staff accountability, noting that a mandate will convey greater urgency than a recommendation or suggestion -- and result in greater compliance.
"If you hold people accountable, you get more consistency. If you get more consistency, you get more reliability."
Mr. Studer, who formed Studer Group in 1999, has seen his firm's annual revenues grow from $5 million in 2001 to $45 million in 2010. In 2010, Studer Group won the Malcolm Baldrige Quality Award for small businesses based on its growth and high satisfaction scores from its CEO clients.
Steve Twedt: email@example.com or 412-263-1963.