Academic medical centers play a crucial role in treating complex patient populations in an educational setting, but many of these facilities also encounter financial challenges, including inflation and reimbursement rates that don’t keep pace with costs, according to senior partners Edward Levine and Rupal Malani and colleagues. In a recent McKinsey survey, two-thirds of US academic medical center leaders indicate that physician productivity and length of patient stay are the areas with the greatest potential for margin improvement.
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A bar graph shows the performance areas that have the greatest untapped potential for margin improvement, according to medical center leaders. Respondents were asked to select their top 2 choices. The No. 1 choice with almost twice the share of any other option, at 41%, was length of patient stay, followed by physician productivity at 22%; premium pay optimization at 16%; operating room utilization at 15%; organizational-structure redesign at 13%; clinical-workforce productivity and nonclinical-workforce optimization at 12%; revenue cycle management at 9%; organic growth at 8%; payer contracting and alternative revenue streams at 7%; footprint optimization, referral and transfer management, and inorganic growth at 6%; and pharmacy spend at 5%.
Source: Survey of academic medical center leaders (conducted summer 2023, n = 100).
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To read the article, see “Ensuring the financial sustainability of academic medical centers,” April 4, 2024.