There’s been no shortage of media coverage questioning the future of private hospitals, especially in light of Healthscope’s recent demise into administration. With forthcoming wage increases for healthcare staff (while incremental and well deserved), the financial strain is only expected to grow. The industry requires a quantum shift, but it’s unlikely to come from further organic productivity gains, with services already pushed to their limits. Adeney Private Hospital’s ‘no gap’ model is an innovative concept, and a potential game changer, but it is too early to tell whether such a model will be viable.
For many years now, private hospitals have sought to introduce productivity gains to improve or retain profitability. To a large degree, it’s been the only solution to counter escalating expenses, which were increasing at a rate that exceeded incremental revenue growth.
Prior and current examples of productivity gains include:
- Reductions in average length of hospital stay (inclusive of shifts from inpatient to day patient work)
- Rehabilitation and hospitalisation in the home
- Increased scrutiny of labour hours per patient day
- Greater focus on volume rebates with suppliers
- Industry aggregation (significant reduction of independent hospitals)
In an industry which has exhausted other material means, AI could be a key opportunity to improve its viability.
Others may wish to argue the merits of AI’s ability to enhance qualitative outcomes. However, my focus is on improving the bottom line, though acknowledge qualitative benefits will improve service excellence and reputation, which in turn optimises financial viability.
As in most industries, there is little doubt that routine administrative tasks can be more efficiently undertaken by AI, therefore saving labour costs – the largest expense in any healthcare system. That aside, here are three major areas where I think AI has the most potential.
Patient/Surgical Flow
A challenge for hospitals is the ability to accurately predict their daily activity, often resulting in potential resourcing issues. Whilst hospital providers currently make assumptions given known seasonal factors, AI has greater capacity to predict patient flow patterns, surgery durations and peak demand periods, thus enabling optimising staffing. This predictive capability could also enhance surgical rostering in real time with multiple advantages, including to combat:
- Over staffing – which has negative implications for staff (e.g. reduced availability of staff at other times) and incurs unnecessary costs
- Under staffing – which puts additional pressure on already strained staff to accept overtime, may require engaging additional casual staff at premium rates, compromises theatre throughput and patient care
Another bug bear of busy hospitals – particularly those with an Emergency Department (ED) – is patient flow. Cohesion between the ED and wards is often challenging, with ‘bed block’ resulting in patients remaining in ED for unnecessarily long periods. AI driven dashboards integrated within the hospital command centres have the potential to track live bed status across all wards, predict when beds will become available and alert staff to bottlenecks before they escalate.
Revenue per patient day (RPPD)
When I was a hospital General Manager, RPPD was the negative KPI that I feared most. In simple terms, if revenue per patient day was off target by just $20 per day in a month where the hospital averaged 250 patients a day, the executive would have to find $150,000 in expense savings to achieve budget or significantly exceed budgeted activity. Obviously, the greater the negative daily variance, the larger the deficit. AI has the capacity to code and bill more accurately, so as to optimise justifiable revenue billings.
Supply chain
Hospitals face a delicate balance between overstocking (which ties up capital) and understocking (which risks patient care delays). AI can help addresses this through better supply chain management. For example:
- Inventory prediction models: AI can forecast usage patterns for inventory including pharmaceuticals, surgical kits, implants and PPE, reducing expiry-related waste and emergency reordering
- Supplier collaboration: Predictive insights can be shared with suppliers to negotiate just-in-time deliveries, improving supply chain resilience and lowering storage costs
Will AI be a game changer? Beyond financial viability, I can certainly see the merits of AI in improving care, enhancing patient experience, augmenting clinical decision making, and uplifting workforce support and wellbeing. These factors will also enable recruitment, where attracting highly specialised healthcare staff is critical. Investing in AI isn’t just following a tech trend. For a sector at breaking point, it’s a strategic imperative that may be the lifeline Australia’s private hospitals desperately need.
If you would like advice on attracting and retaining talent in private hospitals or in the broader Healthcare sector, please don’t hesitate to contact me or connect with me on LinkedIn.
Vincent Borg has extensive experience in the health sector, having worked both in private and not-for-profit organisations. His previous roles as General Manager at Healthscope, St. Vincent’s Private Hospital and Epworth Healthcare saw him oversee large, multi-site facilities in the acute and sub-acute services, including greenfield operations. Vincent’s recent operational experience means he is well-connected with industry thought leaders, across all segments of the sector. As such, he has a clear understanding of issues many hospital executives are currently experiencing and the emerging issues impacting health care providers. Read more…