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Igor Belokrinitsky

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Fairly smooth sailing seen for for-profit hospitals


Moody’s, the ratings agency, forecasts that for-profit hospitals will do okay over the next 18 months, with earnings growth expected to be in the low single-digits and revenue and pricing continuing to be modestly positive.

“Positive same-facility revenue growth and flat margins drive our stable outlook for the U.S. for-profit hospital sector,” Moody’s senior vice president Jessica Gladstone said. “Aggregate EBITDA will grow 2.5 percent-3.5 percent over the next year or so. Margins will hold steady as company-specific actions offset multiple industry challenges, including higher wage and benefits expense stemming from nursing shortages and increased physician employment.”

Moody’s expects patient volumes to rise 1-2 percent over the next 18 months, with declining unemployment and an aging population among the macro trends that will continue to spur demand for healthcare. “However, structural shifts in payer programs that aim to reduce utilization and the cost of care by shifting patients to lower-cost settings will offset these positive trends,’’ she said.

Igor Belokrinitsky, healthcare strategist at Strategy&, part of PwC, noted to Healthcare Dive that many hospitals are tightening their operations, trying to keep costs frozen in some departments and tinkering with staff and marketing to reduce near-term spending.

“The changes are becoming more dramatic. Fortunately, there’s a bit of a cushion there because what’s been happening over the years is a lot of these hospital systems have consolidated,”  Mr. Belokrinitsky observed. Generally in a hospital merger, the bought property still gets to keep its board, staff, etc. That’s the reserve that’s out there. That’s the value that could be squeezed out of the system if you … really integrated these hospital systems so they function much more as a system as opposed to as a random collection of hospitals.”

To read more, please hit this link.


6 reasons why system innovation fails


In a Becker’s Hospital Review piece, Igor Belokrinitsky, a principal with Strategy&, PwC’s global consulting team, and John Petito, a manager with the firm, present six reasons why health-system innovation fails. Here are their ideas in stripped-down form:

1. “Treating innovation like any other project. … In times of austerity and budget cuts, innovation efforts can be perceived as non-essential, and are at greater risk of falling subject to the axe.”

2. ”Measuring the wrong things. … Measuring innovation efforts strictly by financial projections may be misleading, as financial projections for early stage and start up businesses are subject to significant uncertainty, and are easily missed.”

3. ”Not understanding the talent market. …  Leveraging traditional HR functions that don’t understand the profile or motivations of the right talent can significantly impair your innovation effort, the success of which is largely determined by having the right leaders to drive it.”

4. ”Borrowing from the corporate playbook. … {W}ithout embracing an entrepreneurial culture (e.g., focus on building MVPs, employing lightweight contracting), the innovation effort risks over-building and over-contracting products for enterprise clients without first having established product-market fit.”

5. ”Failing to keep ‘fit.’ …A coherent portfolio that supports the organization’s overall strategy not only ensures executive and board alignment, it can yield positive benefits by enabling your organization to create a compelling case to outside philanthropists, grant-providing organizations, and strategic partners.”

6. “Not ‘leaning in’  to innovation soon enough. Innovation is not for the faint of heart — it requires time, capital, focus and perseverance. Organizations sometimes seek to hedge their bets by relying on external incubators or contract resources to execute against an innovation agenda, and to avoid building the internal infrastructure required for long-term success. While this may be a viable short-term solution to “jumpstart” the effort while building your team, relying on this strategy long-term is a high cost proposition that leaves your organization vulnerable to knowledge leakage and accountability issues.”

To read the whole piece, please hit this link.
Igor Belokrinitsky is a principal with Strategy&, PwC’s global consulting team, and John Petito is a manager with the firm.


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