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System-level Surgical Governance Can Unlock the Benefits of Consolidation

Posted by Kartik Bhatt on Mar 29, 2022 2:33:26 PM
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System-level Surgical Governance Can Unlock the Benefits of Consolidation

The consolidation of hospitals and providers into larger health systems is changing the landscape of how health care is delivered across the country. While there are continued debates on the benefits of consolidation, the trend is not slowing down. Pauses in elective procedures, severe staff shortages, and supply chain disruptions caused by the COVID-19 pandemic have put hospitals under severe financial duress across the country, resulting in many individual hospitals seeking to be acquired by a larger health system to alleviate some of the financial pressure. Acquired hospitals see a 2.5% reduction in annual operating expenses per admission. Acquired hospitals also see benefits of scale and standardization across the health system. However, the benefits associated with scale and standardization are not automatic consequences of consolidation. Rather, achieving these benefits requires a targeted, data-driven process improvement effort across the system.
As health systems acquire individual hospitals, they face a significant challenge with standardization. The lack of standardization results in different policies and data definitions across the system. Each facility in the system has different expectations of their providers, and there is no standard way to measure and monitor performance. As one of the largest cost centers in a health system, administrators often look to procedural services to take the lead during these process improvement efforts. Successful process improvement efforts in procedural services can have a significant impact on cost reduction, clinical and operational standardization, and management of resources and equipment at scale. Successful system-level process improvement projects in procedural services require two main components: an empowered system-level surgical governance committee and robust operational and financial data to allow the committee to make informed, data-driven decisions.
The success of this committee hinges on certain key factors that should be taken into consideration when the committee is being created. The system-level perioperative steering committee (SPSC) needs to: (1) be empowered by system leadership to serve as the operations committee for perioperative services with the authority to make operations decisions, (2) have representation from all hospitals in the system, (3) have multidisciplinary representation from surgeons, nursing leadership, anesthesia department leadership, and administrative sponsors (usually one of each from every hospital in the system), and (4) have a dedicated data resource that can provide relevant data to the committee members. The SPSC will provide operational oversight/guidance of perioperative services that are best managed at the system level. This usually includes, but is not limited to, patient scheduling and preparation, patient pre-certification, preference card management, surgeon access and block allocations, sterile processing, materials management, establishment of benchmarks and dashboards to monitor key performance indicators, and budgeting and financial analyses.
Usually, the SPSC establishes annual goals to prioritize efforts and focus on specific areas. Typical examples might include: growth in surgical volume, growth in targeted service lines, increased market share in both primary and secondary service areas, improvements in clinical outcomes (length-of-stay, post-surgical complications, etc.), improvements in operational indicators (first case on-time starts, turnover times, utilization, etc.), improvements in patient, surgeon, and staff satisfaction, and improvements in optimizing patients pre-surgically (managing comorbid conditions, completed charts prior to day of surgery, etc.). Given the large breadth and depth of what the SPSC focuses on, it is easy to see the need for standard and robust data collection, analysis, and reporting. Advanced analytics tools that ingest raw data directly from EHRs to produce reports remove the subjectivity around how data is captured and reported and serve as the single source of truth for the SPSC. These analytics tools allow the SPSC to compare individual hospitals within the system to gain a better understanding of what
initiatives should be tackled at the system level versus what initiatives only need to be rolled out at individual hospitals. A well-functioning SPSC armed with robust data can lead the charge in ensuring that a growing health system is able to reap the benefits of consolidation.


  1. https://www.healthaffairs.org/doi/10.1377/hlthaff.2020.00017
  2. https://hbr.org/2021/03/the-pandemic-will-fuel-consolidation-in-u-s-health-care
  3. https://www.aha.org/guidesreports/2017-01-24-hospital-merger-benefits-views-hospital-leaders-and-econometric-analysis

Tags: Staff Engagement, Surgical Care, Recruiting