C-Suite Focusing on Healthcare Revenue Growth Over Cost Control

June 17, 2019 - Healthcare revenue growth pushed past cost containment as the greatest priority for C-suite executives in 2019, according to the results of a new survey.

In the Advisory Board’s Annual Health Care CEO Survey, more executives said healthcare revenue growth was their single top priority, selecting the answer more often than population health and accountable care organization (ACO) strategy, cost containment, and physician network alignment.

“Health systems have not given up their keen eye on improving cost control, and yet C-suite executives recognize the need for comprehensive margin management strategies that include revenue growth,” Christopher Kerns, executive director of research at Advisory Board, said in the announcement. “Balanced strategies are the key to achieving financial viability and securing the strategic flexibility necessary to respond to new market entrants and disruptors.”

C-suite executives are shifting their resources in response to market changes, the survey confirmed.

Last year, the Advisory Board’s survey showed that executives focused on implementing sustainable cost control initiatives and developing innovative approaches to expense reduction, ranking both as their top concerns in 2018.

However, both of the top 2018 priorities fell down the rankings in 2019.

When asked about their level of interest in 2019 topics, including “meeting the rising consumer demands for service,” “developing a Medicare Advantage strategy,” and “building an effective innovation hub,” respondents most frequently selected the following:

• Improving ambulatory access (57 percent)
• Minimizing unwarranted clinical variation (53 percent)
• Strengthening primary care alignment (53 percent)
• Redesigning health system services for population health (52 percent)
• Innovative approaches to expense reduction (51 percent)

While executives were slightly less interested in developing innovative approaches to expense reduction, decreasing the interest area’s ranking from the top two to the bottom of the top five in 2019, the healthcare leaders expressed even less interest in preparing the enterprise for sustainable cost control. The interest area fell to number 11 out of the 29 available topics in 2019.

This year, C-suite executives expressed greater interest in building upstream services lines to capture additional revenue.

In fact, improving ambulatory access was the top interest area for C-suite executives in 2019, the survey showed. Researchers explained that executives plan to focus on adjusting facilities, staffing, hours of operation, or throughout to enhance the patient’s ability to receive across in more convenient locations, such as an outpatient facility, physician office, or clinic.

In this year’s survey, 57 percent of executives said they were extremely interest in building ambulatory access, resulting in the interest area rising from eighth place in 2018.

Strengthening primary care alignment is also a key strategy for healthcare revenue growth, researchers pointed out.

“Strengthening primary care alignment means improving the hospital-physician partnership to enable mutual success under different payment and care-delivery models,” they explained. “Redesigning health systems for population health refers to making organizational, facility, process and technology changes to support care and payment models that promote improvement in patient outcomes rather than care volume.”

Bolstering upstream services is becoming increasingly important as traditional healthcare organizations (e.g., hospitals and health systems) transition to value-based care, which disincentivizes providers from filling inpatient beds and rewards those who keep patients healthy outside of the hospital. Maximizing performance-based revenue hinges on less expensive primary care and outpatient services.

Hospitals and health systems are also facing competition from industry disruptors, such as UnitedHealth Group/Optum, CVS Health/Aetna, and Amazon. The disruptors are offering consumers more convenient healthcare services and locations at a lower cost compared to the traditional setting for the service.

Traditional healthcare organizations have been notoriously sluggish with adopting consumer-centric capabilities, including price transparency, retail clinics, and online appointment scheduling.

C-suite executives are realizing that failing to align business with consumer demands while new industry players disrupt the market could significantly hurt revenue.

“Executives are more interested in moving upstream to capture revenue growth through ambulatory access and primary care, rather than traditional strategies of boosting hospital market share,” said Yulan Egan, practice manager of research at Advisory Board.