Improvement plan for private hospital
The Problem: Weak profitability of a key asset within a private hospital portfolio
Our client, a leading UK Private Hospital Operator, had identified an underperforming asset within its network, and approached Credo for support in determining why the hospital was operating at below its target revenue and target margin, and for support in identifying measures to improve the financial performance.
Our Approach: Review of utilisation and profitability, development and impact modelling of potential improvement scenarios
The hospital was believed to be underutilised, with a mixture of procedures and specialties – some of which were believed to be far more profitable than others. Our approach therefore involved supporting the development of a cost allocation model that calculated the profitability of individual procedures, and undertaking a review of hospital utilisation by key department and specialty.
This allowed us to identify procedures or groups of procedures that were low margin and / or resource intensive. We worked closely with hospital management to understand the interdependencies between procedures, specialties, funder groups and individual surgeons and the risks associated with realigning the activity-mix of the hospital. We worked with the client to develop a number of potential scenarios for the hospital going forwards, and we modelled the financial impact of each, allowing the creation of a performance improvement plan.
The Result: Strong understanding of current performance, improvement plan created
The findings of the profitability review were embraced by Clinical and Non-clinical Hospital Management, and a process to realign the activity-mix of the hospital and review options for the development of adjacent services was undertaken.