Strategic Business Planning: Platform for a "Heart Hospital" Model

Hospital providers are challenged to assess and consider re-engineering their processes for providing care to cardiovascular patients. Unparalleled demand, advances in technology, reduced reimbursements and competition will force hospital administrators and their Boards to evaluate services from both a space and programmatic perspective. By implementing a strategic business planning approach, hospital providers can make critically important decisions that are market responsive, patient focused and user (personnel and medical staff) friendly. Marrying function with design, such as with the innovative one stop postoperative open heart surgery recovery model, presents the ideal example of objectively assigning space.

The continued need for quality patient outcomes and program cost efficiency will only grow in importance with the increasing demand for services in this highly competitive market. By promoting long term operation efficiency, easy access and circulation through physical space design, organizations can be prepared for the “baby boomer” patient who will not be easily satisfied. Balancing the need for a competitive edge with limited financial resources requires in depth analysis and organizational attention. By focusing all stakeholders on the program’s purpose and mission, hospitals can identify their target market while attracting patients and physicians. In addition, provide optimum medical care from a sound clinical and financial position.

A successful heart program can look many different ways, however it will need to be the product of a disciplined business planning process. It must address market expectations, revenue projections and facility design within realistic capital cost proposals and program definition. 

Faced with reduced reimbursements, rigid review of medically necessary admissions and the shifting of care from inpatient to outpatient, hospitals are taking a critical look at the services they offer today and what to plan for in the future. Heart care continues to be one of the most important clinical care areas, generating up to 40% of acute care revenue. With the anticipation of increased demand for cardiovascular disease care due to the "baby boomers" advancing to the prevalent age, it is essential hospitals respond appropriately. Demand estimates predict that one out of two men and one of three women will require significant amounts of care for cardiovascular disease in their lifetime. 

Evaluating the current and future demand, critically assessing services offered, balancing the cost of maintaining a competitive edge, in light of limited resources while meeting the needs of the patients, physicians and staff is the challenge of every hospital. Decisions that can affect the future presence and viability of the acute care hospital requires serious attention and assessment of cardiovascular care services.

Hospitals will need a focused and care specific approach to planning for cardiovascular services. This can be accomplished with a well-developed business planning process that defines goals, activities and expected outcomes. Integral to the process will be the application of a market demand assessment and market responsive rationale to space justification and physical plant expansion or renovation. Defining and differentiating the services provided is essential to accomplishing the organization's cardiovascular goals as well as identifying the location and availability. Determining how to foster growth of the cardiovascular business, weighing the "wish list," of program design and technology advances against cost can be addressed with a Cardiovascular Strategic Business Plan.

The CV (Cardiovascular) Strategic Business Plan is the result of the collection and analysis of historical market information that should include demographic research, as well as assessment of medical referral admission patterns. An in depth review of existing cardiovascular services identifying the utilization of services and capacity can be the foundation for expansion considerations. The business planning is not complete without the crucially important financial analysis and assumptions. While a business plan's primary purpose is to provide the hospital with a strategic "road map" that outlines activity and recommendations to maximize the opportunity for success, it can also be used for other purposes.  Hospitals have presented their CV expansion business plan to bonding and lending institutions. In addition, their business plan may be utilized to recruit CV specialty medical staff.

The CV business planning process defines the purpose and parameters of the services directed toward a defined patient population and results in a clear vision for the program. The Vision development encompasses several areas:

• Program Goals--Address what services are needed by the community served and determine which are appropriate for the hospital to implement, expand or discontinue
• Situational Analysis--Address what legislative and environmental factors could influence decision-making. What are the barriers to entry?
• Industry and Market Trends--Consider that technology and medical advances have driven change in CV care. Angioplasty has substantially altered the medical community's response to coronary artery disease?
• Medical and Hospital Staff Input--Address what perceptions and what levels of support exist. Who will champion program additions and changes?
• Organization Vision--Address how a CV program integrates with the master organizational plan and hospital mission?

The CV business planning process must evaluate the past and current market for services. A detailed Market Analysis provides the basis for volume projections and program growth goals.  The process begins with the identification of the Total Cardiac Target Market™ (TCTM™).  This market area is defined as the region a hospital could draw patients to utilize "heart care" services. This is determined by reviewing historical admissions for the Major Diagnosis Code (MDC) 5: Conditions of the Circulatory System. Geographical and referral patterns are also considered in defining the TCTM™. Once this area is identified it will be the basis of the Market Analysis that consist of these sections:

• Market Share--TCTM™ MDC 5 admissions for the most recently reported years can give a "snap shot" of the volume history. This should be analyzed at the Diagnostic Related Grouping (DRG) level to clearly understand specific services volume, demand and competitive positioning.
• Demographic and Socioeconomic Factors--Age has been determined to be the most closely correlated factor to CV disease. Social and economic factors can influence continuum of care program element design. Risk factor and CV mortality analysis can support program development.
• Competitor Activity--Review of MDC 5 and Medicare activity for all hospitals that serve the same patient population can provide the opportunity to determine the total admission volume for CV care and the percent being currently captured by all providers.
• Referral Patterns--Review of medical and surgical admission volume and CV diagnostic test volume by physician provides information on actual service usage. This review can provide the opportunity and platform to strategize on methods for growing referrals.
• Medical Staff Commitment--Interviews with Primary Care Physicians, cardiologists, CV surgeons and medical leadership can provide valuable information on the perception of current services and provide feedback on any issues to which the hospital can respond.  Interviews will reveal the individual physician's level of commitment, enthusiasm and often identify potential program champions.

A comprehensive review of all cardiovascular services offered is essential in determining the current level of efficiency. A detailed description of the cost of care will be helpful in making decisions regarding the expansion or reduction of services. The Operational and Capacity Analysis should provide information on the following areas:

• Current Operations--The information collected on the location, hours of operation and variety of diagnostic and clinical services offered should be measured against industry standards. Benchmarking clinical outcomes such as length of stay, mortality and morbidity, as well as patient satisfaction can provide insight into the efficacy of services.

• Proposed Scope of Services--Following a review of the existing services offered, the identification of market demand needs and review of the available or planned resource allocation should lay the ground work for making decisions on the need to add or reduce services, make governance or structural changes.
• Facility Options--Most hospitals do not have the opportunity to design and build a "heart hospital" to house all CV services. This is evaluated on a case-by-case basis and if possible, the CV diagnostic areas can be consolidated to provide a patient and physician convenient facility that can capitalize on staffing efficiency.
• Capacity Planning and Analysis--Once the procedure and test volume estimates are determined, the physical design has been defined. Analysis of factors such as length of stay, room turn around time and inefficiency ratios can be assessed to provide capacity projections.   
• Staffing analysis--By applying the estimated "time of care" needs within a volume-based model, the number of personnel can be projected. Comparing this to industry guidelines provides a sound position for staff justification.
• Equipment Requirements--Advancing technology and physician driven requests most often drive the need for new CV equipment. Cath lab imaging equipment is often the most expensive. Systems for information and imaging management that can interface the CV program have been developed and are becoming a "service" differentiator for hospitals.

The demand for services, insuring a strong "CV care" presence and the current competitive environment are contributing to the recent development of the "Heart Hospital," as a care delivery model. While some hospitals and health systems have the resources to build a freestanding facility, others can achieve some of the benefits from consolidation or relocation of services. Key areas that need to be addressed within the strategic planning process include:

• Comparable Facilities and Markets--An external review of CV program building and development can provide valuable insight during the planning process. Analyzing the response of the patients, staff and physician customers in similar markets can help with planning decisions as well as with problem anticipation.
• Facility Size and Design--Resources, resource opportunity and market demand are the driving forces for determining physical plant needs and design. While a distinct building with or without connectivity to an existing acute care facility could positively impact program definition, a conceptual model can be achieved through service line management and/or governance.
• Ownership Structure--The "Heart Hospital" that is a physically distinct operation lends itself to various ownership models. By delineating revenue as well as capital and operating expenses, the model can conform to government regulations for partnership/ownership opportunities between hospitals and their medical staff.  Arrangements that provide for financial collaboration in the diagnostic testing and cath lab areas are also available and within legally accepted parameters.

• Governance Models--Totally independent "Heart Hospitals" are required to comply with acute care facility accreditation and regulatory authority oversight, but are usually governed by a board representing the actual investor owners. CV service lines within existing acute care hospital structures will often integrate the medical leadership and staff peer review models. In addition, an oversight committee of hospital administrators, medical and surgery directors are usually established to provide programmatic direction.

Consideration of all the Strategic Business Plan components is essential when determining which options are in accordance with organization's mission, vision and resource situation. "Heart Hospitals" can cost millions of dollars or can be incorporated into an existing facility requiring renovation and capital equipment outlay, which could cost considerably less. The market projections are used to estimate space requirements and facility design. The most popular trend today is to "build" a program that streamlines the postoperative patient flow care path. Recovery from open heart surgery in the One Stop Post Op™ unit provides an opportunity for a controlled clinical environment that is patient centered and care delivery efficient. Reducing patient transfers has been proven to reduce length of stay and has increased patient, nurse and physician satisfaction. Hospitals with space restraints are often able to renovate existing floors to accommodate this innovative approach to care.

Following the decision on facility design, an organization should take advantage of the CV strategic planning process to evaluate the hospital management structure. Service Line Management tied to a clinical area provides for ownership, accountability and efficient care delivery. Many large hospitals have implemented this approach since it became popular in the late 80's, but the smaller community based organizations do not feel they have the "clinical volume" to support this management structure. Review of the market and anticipated demand combined with consolidation of clinically related departments will facilitate acceptance of this approach.

 Revenue projection, financial assumptions and estimates for all program costs such as overhead, training and education, medical coverage, bad dept, interest expense and program marketing can be developed to provide a program proforma with pay back and return on investment projections.  Careful attention to these essential markets, operational and financial areas should provide the platform for implementation planning, budget development, and structure formation. 

While the physical structure and organizational approach may vary, heart focused care is definitely more than a passing trend. The very future and financial position of an acute care hospital may be dependent on how effectively and efficiently it can meet the increasing demand for cardiovascular care. Core operating directives will need to be established and implemented.  Focusing on high quality patient outcomes, maximizing utilization of current CV technology, improving operations through organizational centralization and applying business modeling to planning are prerequisites to success. The question that an acute care hospital needs to ask today is not whether there is a patient need, but how to develop a program that stands out among many others as an exemplary provider of cardiovascular heath care prepared to accept tomorrow’s challenges?