Healthcare News & Insights

3 innovative strategies one hospital uses to maximize revenue

Hospitals looking to survive and thrive nowadays can’t just replicate the business models they’ve been using. It’ll take more effort to do well in the age of healthcare reform. One hospital, known around the globe for its excellence in pediatric medicine, is following an innovative path to generate revenue, with much success.

122516159The Children’s Hospital of Philadelphia (CHOP) has gotten great ROI with its business model, as discussed in a recent article from Fortune magazine. Hospitals of all kinds can take a page from CHOP’s strategy.

Here are three of the ways CHOP has managed to change the way it delivers care, allowing it to keep a strong economic foothold in a changing healthcare climate:

  1. Maintaining an expanded network of facilities and services. Instead of providing care out of just one large, central location, CHOP has created smaller, satellite centers throughout its coverage area. Some of the centers perform same-day surgeries and other procedures. Others are primary care offices. Because CHOP has offices performing a variety of services, the hospital can contract with many different payors, according to the Fortune article. And the satellite centers are more efficient for CHOP to manage than larger facilities would be. Costs are lower and staff is more productive. In fact, surgeons at the centers often perform twice as many procedures per day than at CHOP’s main teaching hospital. This combination has led to increased profit margins for the centers and for CHOP as a whole.
  2. Providing specialized care and services other facilities can’t. CHOP also stands out by providing more specialized care than other competing hospitals. The Fortune piece gives examples of the technologies and procedures that set CHOP off from the rest of the pack, and make its services more attractive to patients. From revolutionary cell therapies for cancer to surgeries that correct fetal abnormalities in the womb, CHOP makes it a point to focus on giving patients treatment options they can’t find anywhere else. And it pays off. Patients and their families come from across the globe for these procedures – and the hospital is often paid higher rates for their care.
  3. Being a venture capitalist. Besides its mission to provide innovative health care to pediatric patients, CHOP also has entrepreneurial goals. An example from Fortune: After developing a rotavirus vaccine, it sold the royalties to investors for $180 million. The children’s hospital is also making steps toward creating new businesses of its own. CHOP’s latest investment is Sparks Therapeutics, its newly rebranded gene therapy research division, now an independent entity funded by CHOP. Sparks Therapeutics is currently working on two different drugs that are currently in clinical trials. Once the drugs complete the trials process, they’ll be an additional source of revenue for CHOP.

Hospitals can take similar approaches to figure out ways to diversify their revenue and bring in more patients. Even if CHOP’s exact strategy may not work in your hospital, the general principles can be adapted into your hospital’s business plan to keep it competitive in the current healthcare market.

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