The leadership advantage hospitals can't afford to ignore | Viewpoint

Hospital leaders face one of the most difficult operating environments in decades.

Labor shortages persist, costs continue to rise, reimbursement remains under pressure, and patient demand shows little sign of easing. Many organizations are doing everything possible simply to maintain financial stability while preserving access to care.

It is entirely appropriate for hospitals to advocate for higher reimbursement. Without adequate payment, many organizations - particularly those serving vulnerable communities - will struggle to fulfill their missions. But reimbursement alone has never been a long-term strategy.

The organizations most likely to succeed over the next decade will distinguish themselves not only by securing additional resources but by demonstrating exceptional stewardship of the resources they already have. In an era of increasing financial scrutiny, operational excellence is no longer simply an efficiency initiative. It has become a leadership imperative.

Every additional healthcare dollar ultimately comes from one of three sources: taxpayers, employers, or patients. All three face growing financial pressure. As healthcare affordability has become the top public concern, hospitals will inevitably be asked to demonstrate that additional funding translates into measurable improvements in patient care rather than simply supporting existing operations. That expectation should not be viewed as a threat. It is an opportunity.

Across many industries, organizations build long-term credibility by showing they continuously improve how they use existing resources before asking for more. Healthcare should be no exception. Hospitals that consistently improve productivity, patient safety, workforce satisfaction, and financial performance strengthen not only their balance sheets but also their credibility with policymakers, employers, patients, and the communities they serve.

Fortunately, many hospitals have already shown what this looks like in practice. One of the most powerful examples involves something that appears deceptively simple: reducing unnecessary variation in elective admissions across the week.

Most hospitals continue to schedule large numbers of elective admissions early in the week. The result is a predictable cycle of overcrowded inpatient units, strained nursing resources, delayed diagnostic services, operating room bottlenecks, and pressure throughout the organization. By week's end, much of that demand subsides, leaving valuable capacity underutilized. These fluctuations are not primarily driven by emergency admissions. They are largely created by the way hospitals schedule elective patients.

Hospitals that have smoothed elective admissions more evenly throughout the week have demonstrated that existing beds, operating rooms, nurses, physicians, and diagnostic services can be used far more effectively—without reducing services, hiring large numbers of additional staff, or constructing new facilities.

The results have been striking. Cincinnati Children's Hospital Medical Center reported $137 million in annual financial benefit while improving patient access and avoiding major capital expenditures. The Ottawa Hospital associated similar operational improvements with 40 fewer patient deaths annually while saving roughly $9 million each year. These organizations demonstrate an important principle: operational excellence is not about asking people to work harder. It is about designing systems that allow talented professionals to perform at their best while using available resources more effectively.

Perhaps even more important, hospitals that consistently improve their operations place themselves in a far stronger position when advocating for additional reimbursement. Demonstrated stewardship gives greater credibility to requests for additional public and private investment because it shows that new resources will build upon an organization already committed to maximizing value.

Healthcare leaders should never have to choose between operational improvement and financial advocacy. The two strategies reinforce one another. Organizations that pursue operational excellence strengthen patient care, improve workforce sustainability, enhance financial performance, and build public confidence. In today's environment, that combination may become one of healthcare's most important competitive advantages.

The strongest case for higher reimbursement is not simply that hospitals need more resources. It is demonstrating, through measurable operational excellence, that every resource entrusted to them is being used as effectively as possible.

Eugene Litvak, PhD, is president and CEO of the nonprofit Institute for Healthcare Optimization and adjunct professor of operations management at the Harvard T.H. Chan School of Public Health.