ICE Series 2: The New Framework for Hospital Profitability Transformation.

Book Extract Chapter 5 on Page 65.

In a bid to aid operational Managers in achieving the balance between the social and financial outcome, strategy, and operations, a simpler business transformation concept has been proposed for hospitals and a framework developed. This is a business framework that hinges on Increasing Revenue, Controlling Cost and Enhancing Value, referred to as ICE Framework. The new framework is an improvement of Profitability Framework.

Understanding profitability issues can help executives, consultants, and entrepreneurs to diagnose and respond to falling revenue, declining sales volume, and rising costs. Businesses sometimes experience reduced profitability. This is not necessarily a problem since business sustainability depends on cash flow, and long-term growth can be achieved from capital accumulation, which shows up on the balance sheet not on the profit and loss statement. However, a drop in profits can be concerning if it is unexpected and unexplained. It can limit a business’s ability to achieve organic growth and may mean that its existing business model is not sustainable.

The Profitability Framework starts off by stating that profit is simply a function of revenue and costs. When a company is facing declining profitability, either revenue has decreased, costs have increased, or both. The idea here is to understand which side of the equation is pulling profitability down and how to go about rectifying the problem. The framework does not consider other service aspects that enhance the elements generating revenue and controlling cost. Profitability Trees are a special kind of Issue Trees created specifically to dissect profits. However, not all business problems are profit oriented.

With changes in healthcare regulations and reimbursement and in the face of innovative new entrants, hospitals and hospital systems are searching for new strategies for growth and revenue generation. Today, hospitals must get creative to find new sources of revenue among decreasing reimbursement and increasing regulations. And sometimes, those revenue sources can be hard to reveal hence that is why the drive to increase revenue has become a core strategic guidance for future growth leading to the formation of tactical and strategic action plans to specifically look at increasing revenue. With the drive to Increase revenue, healthcare management costs are also soaring in because of value-based care. Without proper attention, resource expenditures can quickly catapult, threatening hospital’s already-thin margins. The hospital management could identify and realize opportunities to control resource expenditure with proven approaches that reduce costs and boost productivity through formation of Cost Control action plans. Hospital administrators and clinical providers must work together to find forward- looking solutions to improve patient care and manage costs without sacrificing quality hence need for Value Enhancement.

The need to Increase Revenue, Control Cost and Enhance value is the basis of the acronym ICE; I for Increase Revenue, C for Control Cost and E for Enhance value. ICE as a hospital profitability transformation framework employs profitability framework tree by including and enhancing value-based healthcare, also known as value- based care. Value based care is a payment model that rewards healthcare providers for providing quality care to patients.

Figure 1: ICE hospital Profitability Framework by Aquinius(2020)

Under this approach, providers seek to achieve the triple aim of providing better care for patients, better health for populations at a lower cost and an excellent engagement of the service provider. Value-based care focuses on care coordination that ensures patients are given the right care by the right provider at the right time. Thus, in a value- based healthcare model, physicians may collaborate with each other on a patient’s care, rather than making decisions separately that can lead to gaps or overlaps in care.

ICE Transformation Framework is not about being the best, whether it is operations excellence, best practices, or marketing communication tactics. ICE Transformation Framework is about being different. Differentiations and competitive advantages that can beat market macro forces in today’s New World Marketplace. ICE Transformation Framework is just as much about what not to do as it is about what to do. It is a combination of benefits and trade- offs that your brand offers, differentiating you from the competing alternatives in the marketplace. Trade-offs are essential to ICE model. They create the need for choice and purposefully limit what the hospital offers to have a clear differentiation and competitive advantage.

Watch out for ICE Series 3: The Framework for Hospital Profitability Transformation

The final presidential debate: 5 healthcare takeaways

President Donald Trump and former Vice President and Democratic presidential nominee Joe Biden debated Oct. 22 for the last time before the general election. The debate took place in Nashville, Tenn.  

Five takeaways for healthcare leaders:

COVID-19

1. NBC News anchor and moderator Kristen Welker asked President Trump about his strategy for dealing with the country’s latest wave of COVID-19 cases. As of Oct. 22, roughly 40,000 Americans were in the hospitalwith the virus, the most since early August. In response, President Trump cited, as he has in the past, a March study from the Imperial College of London COVID-19 Response Team that projected 2.2 million Americans could die from the virus if no action were taken to control it. He compared that metric to the roughly 222,220 Americans who have died from the virus. The president said spikes and surges will soon be gone, and the virus “will go away, and as I say, we’re rounding the turn, we’re rounding the corner.” As of Oct. 22, 16 states reported the highest share of hospital beds occupied by COVID-19 patients since the pandemic began. 

2. Citing his administration’s COVID-19 vaccine effort Operation Warp Speed, President Trump said a vaccine will be announced in “weeks.” When Ms. Welker asked President Trump if he could guarantee that a vaccine will be delivered in weeks, and what companies could do that, he said he couldn’t guarantee that timeframe. Currently none of the large vaccines trials have been completed. The earliest a drugmaker could apply for emergency use authorization for a COVID-19 vaccine is likely the end of November. The president has previously said a vaccine will be ready by early 2021, and Moncef Slaoui, PhD, chief of the Operation Warp Speed, said Oct. 21 that all Americans should be inoculated by next June.

3. When asked about the pandemic, Mr. Biden focused on the current surge in COVID-19 cases, saying the U.S. is seeing more than 70,000 new cases a day, a number reported Oct. 20 by The New York Times‘ database. In his criticism of the current administration’s handling of the virus, Mr. Biden cited an Oct. 8 editorial from The New England Journal of Medicine that denounced the White House’s handling of the COVID-19 pandemic. Mr. Biden claimed 200,000 more Americans may die from the virus before the end of year. Current forecasts from the Institute for Health Metrics and Evaluation at the University of Washington project the nation’s death toll may be between 284,000 and 340,000 by 2021. 

The ACA

4. The White House supports a lawsuit that seeks to overturn the ACA. The case is set to come before the Supreme Court Nov. 10. Ms. Welker asked President Trump what his administration would do to protect Americans who could lose their health insurance if the Supreme Court decides to invalidate the health law. President Trump focused on his administration’s termination of the ACA’s individual mandate, and again said preexisting condition protections under the health law would not go away, but did not explain how they would be maintained.

Health strategy 

5. President Trump accused Mr. Biden of wanting to end private health insurance for the roughly 180 million Americans who purchase their health insurance through a private insurer. President Trump also called out Mr. Biden’s running mate, U.S. Sen. Kamala Harris, for her shifting stance on Medicare-for-All. A health plan Ms. Harris proposed in 2019 includes a role for private insurers. Mr. Biden refuted President Trump’s claim about Americans losing private insurance under his plan saying he supports private payers. If the ACA is struck down, Mr. Biden said he would implement “Bidencare,” which includes a government-run public option that would compete with insurers but not eliminate them. Mr. Biden, who has not supported Medicare-for-All, distanced himself from other Democratic presidential candidates who have strongly supported similar proposals. 

The article was produced and/or originate at Becker’s Hospital Review and they are the original producer/publisher of the content