A majority of human resource executives at U.S. hospitals and health care systems expect health care reform to hasten the transformation of the industry’s traditional business model, according to a new survey by Towers Watson. The survey also found that workforce issues, including shortages of primary care physicians, the need for a wider array of staff skills and new leadership models, will rise in importance as the industry grapples with this transformation.

The survey found that a majority of respondents anticipate significant changes in their operations when the new legislation is fully implemented. For example, fully 93% expect cuts in reimbursement levels, and 67% anticipate a shift in the payer mix, with fewer private payers. Just over three-quarters (77%) agree they will need a wider range of skills among their staff. And three-quarters expect a higher ratio of outpatient to inpatient care, as well as an increased need for primary care capabilities.

“A perfect storm of forces is hitting the hospital industry all at once,” says Heidi Toppel, a Towers Watson senior consultant. “Industry executives have no illusions about the extent and magnitude of the forthcoming change. But the scope and complexity can be daunting, especially since hospitals have to rethink and refine core business and operating processes while continuing to deliver quality care to the communities they serve.”

The survey findings demonstrate a consistent push/pull between a business-as-usual mindset, and the need for fresh thinking and approaches to delivering care efficiently and effectively. In terms of their top three greatest business challenges over the next two to three years, respondents cited managing costs (72%), improving quality of care (56%) and managing changes in the payer mix (25%). Far fewer, though, cited collaborating with local providers on community health and wellness services (18%), arguably a critical focus for the future.

Talent gaps loom

The survey found that most respondents aren’t currently experiencing serious labor shortages, and believe turnover and retirement are ideal or manageable today, although two-thirds reported slight to moderate shortages of physicians and nurses. However, most respondents anticipate additional shortages over the next two to three years, with the biggest gaps expected in patient-facing roles. More than two-thirds of respondents (70%) expect shortages of bedside registered nurses to increase moderately to significantly, while more than half expect increased shortages across a range of roles, from nurse practitioners, to physicians, to allied health professionals, to clinical technicians.

“We expect a sizable percentage of experienced physicians and nurses will likely retire over the next decade, potentially creating a diminished supply of clinical staff down the road,” says Toppel. “The danger is that today’s glut of recent medical and nursing school graduates could mask this looming problem, so hospital HR executives can’t take their eyes off the talent management ball if they want to ensure they remain competitive in the labor market."

Interestingly, most respondents expressed the least concern about the availability of executive talent, with just under three-fourths anticipating no change in the supply of hospital executives and administrators. The survey report notes that basing predictions of future needs on present circumstances could be misleading. Leadership competencies needed for the future will be very different, and savvy hospitals will need to start the process now of defining the leadership profile for the future.

“Given the industry’s legitimate economic concerns, hospitals are about to face some of their toughest challenges. To compete and flourish in this new environment, they will need to develop strategies for closing gaps in capability, staffing and structure,” said Toppel.

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