Corporate
Management Systems

With a customized corporate management system, your hospital is made more transparent and visions are easily implemented.

Transparent
Corporate Management

Where does the hospital earn money and where does it lose it?

How do you recognize market opportunities and how does the company manage to react quickly enough?

How can managing directors and medical service providers jointly develop each specialist department medically and economically?

How do I move from the vision for the hospital to its operational implementation in daily routine?

This cannot be achieved with financial figures or classic controlling. And confrontation is certainly not a solution either. Antegrad has developed a control system—a corporate management system—and successfully implemented it for clients.

Introduction

The introduction of a standardized DRG system (case-based payments) led to cost transparency and genuine (price) competition between hospitals. The pressure for change triggered by the DRG system will continue to increase in the future and will not be a temporary challenge that can be waited out or ignored. As in any competition, there are winners and losers. In this environment, some hospitals have succeeded in positioning themselves well both medically and economically and in achieving sustainably positive results. However, the general rule is that only those who respond agilely to the consequences and effects arising from the shift to a pricing system, and then adapt accordingly, can be successful. Clinging to existing assumptions and structures was and is not economically viable and, in the short to medium term, even threatens an organization’s very existence.

Challenges facing
“corporate hospitals”

In the DRG system, as in any other pricing system, there are economically worthwhile cases/customers for which there is intense competition, and those that are not financially viable. Over time, specialists typically emerge for the worthwhile cases, focusing exclusively on them. Conversely, all providers that can do so due to their service mandate turn away from cases that can only be treated at a loss. With the introduction of the DRG system, hospitals have effectively become a “business enterprise” and are therefore inevitably subject to economic considerations in all tasks and functions. All are called upon to be “marketable” in their respective areas. This applies not only to core patient care services, but especially also to secondary and tertiary areas (laboratories, pharmacies, cleaning, finance, etc.).

Management / leadership of
medical service providers

Compared with “normal” commercial enterprises, hospitals still have to deal with a specific internal differentiation between core business and administration. Different stakeholders always have different goals and expectations. However, what is distinctive in hospitals is that each group—such as (employed) physicians, nursing staff, and economists—aligns itself much more strongly with its group-specific goals than is the case, for example, in industrial companies. As a result, the goals of the various groups in hospitals are often insufficiently aligned with the goals of the hospital as an organization and may even conflict with the hospital’s goals and/or those of hospital management. The management responsible for the organization must find a way to resolve these conflicts of interest.

Implementation of a Management System

Management and development of medical departments:

Creating transparency

Simple cost center plan and direct mapping of the responsibility structure within it

Contribution margin accounting / specialist department (primary and secondary sectors)

Pricing system and allocation of secondary services > Contribution margin accounting also in the secondary sector

Corporate organization for administrative services (IT, technology, cleaning, catering, etc.) > Contribution margin accounting

Remaining areas with consistent budget control and target/actual presentation

Decisive here: the “simple cost center structure” and clear/unambiguous cost allocation.

All figures presented to managers must be correct (!) i.e., traceable down to the individual voucher.

Calculation of CM 1 and 2 as a measure of responsibility/performance in the respective area of responsibility and establishment of clear, marketable CM 2 target values.

These can vary from department to department. The pediatric department is expected to have a lower CM 2 than cardiology.

Regular "development meetings"

Particularly with medical service providers, management should not talk about financial figures—
but rather about medical KPIs, medical processes, competition, referral structures, and case
potentials, i.e.

KPIs for medical departments

Number of cases

DRG revenues

Case Mix

CMI

DRG revenues / case

Length of stay

Long-stay patients

Short-stay patients

Bed requirements (assumed 90% occupancy; 365 days)

Share of surgical DRGs

Share of non-surgical DRGs

MDK rate

InEK comparison for medical staff

…these are provided for every meeting by Medical Controlling. Management supplements these values with external data, such as:

External data

Market data

Market shares / diagnosis (actual) and potential for +5 and +10 subsequent years; differentiation by gender and age

Competitor data

Case numbers by primary diagnoses and departments of surrounding hospitals

Filters

Effects of demographics, outpatient potential, minimum volumes, epidemiological development, medical progress, etc.

Catchment area

Catchment areas at the level of service focus (down to ICD); consideration of competition and the aforementioned filters

The aim is to use medical KPIs to explain commercial values and derive the need for action
from them. Depending on the result of the commercial KPIs, the need for action can then be defined. The needs for action are derived exclusively from the medical KPIs:

Length of stay too high? Why? What can be done?

Long stays in DRG x? What to do?

Conservative share of DRGs too high?

Portfolio risky due to outpatient potential

Such questions must be discussed and measures found to improve them. By creating such objective discussions, confrontations are avoided, which often take the form of:

Management requirements for Chief Physicians: "Save money" and the Chief Physician's killer argument to management: "...that endangers people"

which do not do justice to the shared responsibility for the hospital enterprise. By management doing this regularly with all service providers and communicating KPI development among all service providers from the moment a positive trend emerges, positive competition arises within the hospital for the best department development, and management and service providers jointly develop the medicine and organization of the hospital.

Example:

In almost every hospital, medical service providers have a very high personal sense of self-worth.

The medicine they provide is first-class or even world-class,

the personally chosen and installed organization of the OR, outpatient clinic, ward, and functional areas is without alternative and perfect,

the referral network is maximal and, of course, supra-regional,

their own department virtually finances the hospital, and if the hospital doesn't earn money, it's due to

the inefficiency of colleagues... especially colleague A or B...

the wasteful administration, and furthermore

all figures concerning their area are wrong anyway... they have their own and...

The cost center plan has a total of 120 cost centers for the hospital. A responsible person must be assigned to each cost center (Chief Physician, Nursing Director, Technical Manager, HR Manager, etc.) This makes it clear: Chief Physician Meyer’s area of responsibility generates costs in the amount of x €. These x € can be presented to the Chief Physician in personnel and material costs down to the individual voucher. Revenues are just as easy to assign—clear and simple rules are established for this as well. For example:

The discharging department or the admitting department is assigned the revenue.

There is a correction by the MDK derived from the past (% rate) and

if there is a substantial share of transfers, these cases are settled on a quarterly basis.

A "price" (market price) is paid for services used from other departments, and conversely, own services for third parties are charged.

The resulting contribution margin accounting is traceable for Chief Physician Meyer. In their clarity and transparency, these commercial values put Chief Physician Meyer’s “own perception” into perspective. On the one hand, it can be shown whether a department is “earning money,” and on the other hand, it can be shown in which medical performance and process KPIs potential exists. Thus, work can begin on addressing the identified potentials in a targeted manner (instead of unspecific… “save money!…”).

With the finding of the first measures to solve

Long-stay patients

MDK rate too high

...

the economic situation / CM 1 and CM 2 of the department automatically improve, and this progress can and should be recognized accordingly. Of course, not every service provider follows this path joyfully and consistently—there are exceptions who refuse—but in all projects, these have always been only exceptions—the majority of service providers welcome the transparency and the visibility of measures and their impact.

Antegrad Implements

Antegrad GmbH has already introduced such systems in several hospitals with great success. Starting with the revision of accounting, cost center structures, and account assignment rules, Antegrad has also led the development meetings in all projects, at least during the more difficult initial period, establishing the system before handing it over to management. Every service provider in a hospital—every Chief Physician—is either very valuable or very expensive for the hospital. The discussion and management of this most important corporate resource (I apologize for this very commercial term here) is a matter for the CEO and cannot be delegated. In the joint development of the departments, the Chief Physician and Management form a team and can only be successful as such overall.

Do you have questions or would you like to receive further information?

Then contact us directly.
Your contact person: Gerhard Becker

At a Glance

Antegrad
optimizes
hospital operations

We help your healthcare company achieve a better strategy and organization at all levels.
We support you in the following areas:

Organizational Development

We help you
develop an appropriate structure and organization for your healthcare company.

Portfolio Development

We examine your specialist departments closely and, on this basis, develop the ideal portfolio for your individual target market.

Development & Management of the Entire Tertiary Sector

We improve performance and efficiency in all sub-sectors of your company—from food supply to central sterilization.