Annual Health Care CEO Survey: Cost Control is Top Priority for Hospital Executives

Cost control has eclipsed revenue growth as the top priority among
health system CEOs, according to Advisory Board’s Annual Health Care CEO
Survey. While interest in revenue growth remains high, both of the top
areas of concern were related to cost structure and management.

The new No. 1 concern for hospital executives is preparing the
enterprise for sustainable cost control, according to the nationwide
survey of 146 C-suite executives conducted between December
2017 and March 2018. This top concern made its CEO Survey debut this
year, and 62 percent of executives said they were extremely interested –
more than for any topic in at least four years and 5 percent more than
for any topic in 2017.

C-Suite executives voted innovative approaches to expense reduction
as the No. 2 topic for the second year in a row.

“Health system CEOs recognize that any effective growth or
financial-sustainability strategy must be built on a competitive cost
structure in order for their enterprises to deliver high-quality,
cost-effective care to the patients they serve,” said Christopher Kerns,
executive director, Research at Advisory Board. “The entrance of
nontraditional health care providers, such as retailers and
consumer-focused imaging and surgery centers, adds to the urgency of
health systems improving cost structures, sometimes radically so, such
as redesigning staffing models, rationalizing service lines across their
market, and even transforming their facility footprint.”

The survey asked executives about their level of concern for 33 topics,
including building an agile enterprise, strengthening primary
care alignment and developing a robust cybersecurity strategy.
The Top 5 areas of extreme interest to hospital and health system
executives are:

1. Preparing the enterprise for sustainable cost control (62
percent)

2. Innovative approaches to expense reduction (56 percent)

3. Exploring diversified, innovative revenue streams (56 percent)

4. Boosting outpatient procedural market share (50 percent)

5. Meeting rising consumer demands for service (50 percent)

None of the Top 5 areas of interest from 2016 ranked among the Top 5 for
2018. One of the fastest-rising topics was meeting rising consumer
demands for service, which surged from No. 10 in 2017 to No. 5 this
year.

The number 3 and 4 areas of extreme interest for 2018 have ranked near
the top for the past two years, showing CEOs’ sustained commitment to
hospital and health system growth, albeit in new directions.

“Health systems and community hospitals alike have expanded their
ambitions for growth to now include nontraditional sources of revenue
growth, such as contracting directly with employers, commercializing
intellectual property and launching innovation hubs,” said Rob Lazerow,
managing director, Research at Advisory Board. “This interest contrasts
with relying solely on conventional channels for securing market share,
such as competing for referrals from independent physicians.”

Advisory Board’s membership includes many of the largest and most
progressive hospitals and health systems in the United States. Survey
questions are based on Advisory Board’s more than 10,000 annual research
interviews with health care executives.

For further insight into the topics of greatest interest to hospital and
health system leaders, visit the Advisory Board’s At
the Helm blog. Health Care Advisory Board members who could not
attend the 2017-18 National Meeting Series can view a
webconference recapping insights on top concerns for health system
C-suite executives.

About Advisory Board

Advisory Board is a best practices firm that uses a combination of
research, technology, and consulting to improve the performance of
4,400+ health care organizations. An Optum business, Advisory Board
forges and finds the best new ideas and proven practices from its
network of thousands of leaders, then customizes and hardwires them into
every level of member organizations, creating enduring value. For more
information, visit www.advisory.com.

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