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Metrics after ownership changes


Herewith Healthcare Transaction Advisors analyzes the financial performance of a large sample of healthcare businesses, including hospitals, before and after major ownership changes.

The seven findings, here summarized by Becker’s Hospital Review:

1. “{S]uccessful hospital financial turnarounds after a change of ownership require sustained growth in net revenues. For the study, a successful turnaround is defined as a business that became profitable by the third year after the change of ownership. ”

2. “‘In gross terms, short-term post change of ownership revenue growth is not alone a predictor of long-term success,’said Jeff Cohen, an attorney at Florida Healthcare Law Firm. “‘The healthiest businesses are those that bring effective management to the table to take care of the ‘blocking and tackling’ on a daily basis to ensure continued growth.”‘

3. “Hospitals that executed turnarounds increased total annual inpatient days 24 percent over four years, compared to 11 percent for the unsuccessful turnarounds….”

4. There’s a “strong correlation between increased growth in outpatient services, inpatient psychiatric unit services, intensive care unit services, outpatient clinic, emergency department and SNF services and successful hospital turnarounds.”

5. The study also identifies several other correlations with successful turnaround performance. These include:

  • “Overall inpatient day growth for all payers.
  • “Ability to restrict building and fixture cost growth.
  • “Increased movable equipment spending.
  • “Increased growth in most ancillary service cost centers.
  • “Enhanced ability to limit medical supplies cost growth.

6. “There appears to be a high correlation of success for those hospitals investing heavily in moveable equipment and technology versus the unsuccessful providers that continue to invest in more traditional real estate,’ said Matt Lindsay, senior vice president at Lancaster Pollard.”

7. “There is no correlation between reductions or increases in staffing, building square footage, and costs for operating room, recovery room and physical therapy services with successful turnaround performance, according to the study.”

The move to short-stay hospitals


To address increased demand for outpatient services and too many unused inpatient beds, a Texas hospital plans to create a short-stay center — a move that other other hospitals across  America  may want to consider, suggests FierceHealthcare.

Despite a recent uptick in inpatient use, industry experts expect declining inpatient volumes to continue  with more care shifting to outpatient settings.  Other  factors include  slow  elective admissions, pressure to keep readmissions low, care integration focused on prevention and technology making  outpatient care safer.

So, the News of Port Arthur reports, Christus Southeast Texas Health System, in Port Arthur, will drop its traditional hospital model and convert St. Mary Hospital to a short-stay center in early September, with five of the hospital’s departments moving to St. Elizabeth Hospital in Beaumont, along with high-risk or long-term patients.

Wayne Moore, vice president of operations for Christus Southeast Texas facilities, told the paper that the patient population simply isn’t using the departing services.

He told the News: “[w]e have to redefine what hospitals are, which is more and more outpatient facilities with very limited inpatient space. That’s how we’re changing to fit the needs of our patients–and it’s based on the model they’ve prepared through the services they use every day.”

After the conversion, St. Mary will provide outpatient emergency services, radiology/laboratory services, chemotherapy and infusion, and surgical capabilities; emergency services will continue unchanged.

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