Nearly 60 percent of hospital execs say transforming business models crucial for survival, survey shows

58 percent of hospital executives say, thanks to current challenges in the hospital and healthcare industry, substantial changes to their business models in the "near term" are a must for survival. That's a key and compelling finding in a new survey released by Prudential and conducted by the The Economist Intelligence Unit.

The EIU wanted to spotlight the fierce challenges the hospital industry currently faces, so in November of 2015 they polled 301 executives from all types of hospitals: urban, rural, big and small, government-owned, private and nonprofit. They also employed a variety of operating structures including network, system and standalone.

First, survey results showed the issues that are top of mind for executives, and the shift from fee-based to value-based payment emerged as clear frontrunner, with 71 percent of respondents calling it a "very critical" or "extremely critical" issue and 61 percent saying it is putting pressure on the hospital's value proposition. Rising costs came in second with 60 percent of those surveyed calling it very or extremely critical. Rounding out the top five were lower Medicare and Medicaid payments, changing patient demands and planning for new regulations, the survey said.

[Also: Only 3% of providers feel ready for pay-for-value, HIMSS survey finds]

It is those daunting challenges that compelled the survey results regarding the seemingly imminent need for hospitals to transform their business models. "Survey respondents believe these challenges have made their current way of doing business unsustainable. A lack of confidence pervades the industry: only one-half of respondents agree with the statement, 'My organization is very prepared to address the critical issues facing the hospital sector today,'" the survey said.

What there seems to be less consensus on is what path that transformation will lead hospitals down in the next few years. When asked "what activities will hospitals conduct in the next three years" 45 percent said an increased focus on niche areas like geriatrics and specific chronic diseases; 39 percent said increased use of digital and other non-traditional methods of service delivery for patients. 36 percent said they'd zero in on using technology to outsource services. None of these represent nearly the same large share as in previous categories.

In other key findings, survey results showed talent acquisition also commanded a significant response from those surveyed. While only 39 percent said attracting and keeping talent is critical to the industry overall, a much larger group of 69 percent said "strategic talent management" will be crucial to the facility's competitive edge, and 74 percent said their own organization needed to focus on attracting and keeping talented staff.

[Also: Big data, analytics drive ACO quality more than value-based reimbursement, JAMA says]

Finally, 60 percent of executives surveyed see big data as a force to change patient management and outcomes, but even more than that, 63 percent said the value of the data they held on patients and outcomes for the most part remained untapped, the survey said.

"If hospitals fail to respond to these challenges, competitors will emerge, which will further unsettle the healthcare landscape. Established hospitals must act quickly and creatively to identify business models that will enable them to thrive in the new healthcare landscape," survey authors wrote.

Twitter: @BethJSanborn