NEWARK, N.J.--(BUSINESS WIRE)--Almost 60 percent of U.S. hospital executives say their institutions must substantially change their business models in the near term if they are to survive financially, according to new research sponsored by Prudential Retirement, which was released today. Prudential Retirement is a business unit of Prudential Financial, Inc. (NYSE:PRU).
The research report, “Tipping Point: Hospital Resilience in a Perfect Storm,” was authored by The Economist Intelligence Unit (EIU), the business research arm of The Economist Group, and sponsored by Prudential Retirement. The EIU surveyed more than 300 executives at rural, urban and suburban hospitals of all sizes and across the country about trends and challenges affecting the U.S. hospital sector. Some of the pressures stem from longstanding trends, while others are a result of requirements of the Affordable Care Act.
U.S. hospitals provide care to more than 34 million patients each year, employ nearly 5.6 million people and spend $782 billion on goods and services from other businesses, according to the American Hospital Association. Given the hospital sector’s critical role in serving their communities, improving the financial health of hospitals is a top concern for hospital executives.
“Multiple pressures hinder U.S. hospitals’ ability to provide the necessary services competitively,” said Scott Boyd, senior vice president and head of Healthcare Solutions for Prudential Retirement. “Many are financial, forcing the C-suite to reorganize or transform business models. Executives also face technological challenges, like the introduction of electronic health records. And others face primarily cultural pressures, such as difficulties in persuading staff to accept new business models, systems and processes, or the need to respond to new patient demands.”
While the report examined several issues facing U.S. hospitals, executives agreed there’s an urgent need to address the following three priorities:
- Business Model Innovation: One of the most well-known changes to hospital business models has been the shift from fee-based to value-based payments. Of those surveyed, 71 percent of hospital executives said that shift posed the most critical challenge, and 61 percent agreed the shift exacerbates pressures on the hospital value proposition. And 58 percent said hospitals must change their business models in order to survive financially. More alarming, only half of the respondents said they were well prepared to address this challenge.
- Putting Data to Work: Many hospitals have embraced some basic technology and data analytics to improve long-term individual patient disease prevention and care, evaluate processes and procedures, and monitor the performance of individual medical personnel. According to the research, 60 percent of hospital executives said Big Data is transforming patient-related opportunities; 57 percent called it a game changer for operational performance; and 63 percent said the value of data that hospitals hold remains largely untapped.
- Focus on Talent: With a third of physicians over 65 years old, the healthcare sector’s aging workforce puts pressure on hospital management to attract and retain new top talent. To face a talent shortage, hospitals will need to find ways to become more attractive to skilled workers. According to a Health Resources and Services Administration report, the growing supply of critical care physicians will be insufficient to provide optimal care to future populations through 2020. According to the EIU research, 69 percent of hospital executives said strategic talent management will be the key to staying competitive and 74 percent said their organization should pay more attention to retaining and attracting the best talent.
This research indicated less than half of hospital executives believe they are well prepared to weather mounting challenges such as margin pressures, rising costs, non-traditional competitors and the shift to value-based payments.
“Prudential has helped many hospitals optimize their retirement benefit plans, attract and retain critical talent, unlock cash flow to redeploy to strategic opportunities and provide better retirement outcomes for their employees,” Boyd continued.
For more information about the pressing challenges facing the hospital sector or to read the research report, visit www.healthcare.prudentialretirement.com.
Prudential Retirement delivers retirement plan solutions for public, private, and nonprofit organizations. Services include defined contribution, defined benefit and non-qualified deferred compensation recordkeeping, administrative services, investment management, comprehensive employee education and communications, and trustee services, as well as a variety of products and strategies, including institutional investment and income products, pension risk transfer solutions and structured settlement services.
With over 85 years of retirement experience, Prudential Retirement helps meet the needs of 4.0 million participants and annuitants. Prudential Retirement has $368.9 billion in retirement account values as of December 31, 2015. Retirement products and services are provided by Prudential Retirement Insurance and Annuity Company (PRIAC), Hartford, CT, or its affiliates. PRIAC is a Prudential Financial company.
Prudential Financial, Inc. (NYSE: PRU), a financial services leader, has operations in the United States, Asia, Europe, and Latin America.