Managed Healthcare Executive - March 2009 - (Page 30) MHE Resource Capital expenditure management critical HOSPITALS ARE STOPPING OR postponing facility upgrades and technology investments, which could jeopardize quality of care, e ciency and coordination of care, according to experts. “Hospitals’ ability to obtain the necessary funds to upgrade their facilities or invest in new clinical and information technologies is severely restricted due to the capital crunch and the recession,” says American Hospital Assn. (AHA) Spokeswoman Elizabeth Lietz. “Hospitals primarily rely on borrowed money, philanthropy and reserves to fund capital projects to improve their ability to meet communities’ healthcare needs, but many now nd it di cult to obtain funds from these sources.” The vast majority of hospitals report that borrowing funds through tax-exempt bonds—the main source of borrowing for most hospitals—is di cult or impossible, according to AHA. “In addition, loans from banks or other nancial institutions are similarly di cult to obtain,” Lietz points out. “Hospitals’ reserves, or savings, also have taken a hit due to falling stock prices. Net income is down, and philanthropic donations have slowed, leaving hospitals with less of their own funds to rely on to make needed improvements.” For executives, business as usual is no longer acceptable, says Tim Olson, senior vice president and CFO of ThedaCare Inc., a community health system in Appleton, Wisc. “We are in an industry which has historically been recession proof. This is not the case in the current recession as the taxexempt bond market has slowed, coupled with signi cant concerns about volumes,” Olson says. “With the two main sources of cash slowing down, we need to manage our capital spending accordingly, making sure we invest in the right projects. Criti30 MARCH 2009 IT PROJECTS THAT WERE PUT ON HOLD Automate Clinical Processes Increase Ef ciency Replace or Update Existing IT Improve Quality/Patient Safety Improve Care Coordination Automate Administrative Processes Provide Decision Support Tools Increase Patient Engagement Improve Accessibility for Patients (e.g., telemedicine) 82% 76% 74% 68% 59% 50% 47% 42% 28% 3% 0 10 20 30 40 50 60 70 80 90 Other Percent of hospitals citing anticipated benefits from IT projects (Includes only those hospitals that indicated they had put information technology purchases on hold) Source: American Hospital Assn. cal management of capital expenditures is required to successfully make it through the current economic conditions.” LOOK WITHIN While tight nancial markets are external barriers to capital investment, some hospitals are looking internally to nd ways to see and eliminate waste—improving internal processes and ensuring they are investing in projects with the greatest payo , patient care and pro tability. On January 1, ThedaCare implemented a toll gate review process for all new and signi cant capital projects. This has slowed the movement on capital requests in the rst month of the year, according to Olson. “We are evaluating our nancial position on a regular basis and will adjust the ow of 2009 capital spending as we understand our volumes and expense levels,” he says. “Existing/prior-approved projects have not been a ected by this change. Should our nancial situation signi cantly deteriorate, we would evaluate these projects as an option for management of our business.” ThedaCare is better positioned to manage its business because of its continued focus on lean management, Olson explains. “ThedaCare continues to work with . . . provider[s] of lean management services to evaluate our processes and take waste and cost out of our system that do not add value to the patient on a regular basis.” IT projects in 2009 will follow the same toll gate review process as Olson previously describes. “In 2009, ThedaCare will continue to invest in minor IT projects,” he says. “If evaluation tells us at the toll gate that there is a signi cant bene t for us to invest in a signi cant project, we would strongly consider proceeding with this, as well.” MHE —Tracey Walker Commentary is independent of source data
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