Service Lines vs. Traditional Departments

Over five years ago, I noticed leading-edge hospitals promoting service lines on their websites.  Now, almost 50% of hospitals have adopted some form a service line/product line management.  So, what’s the benefit for the hospital or the patient in this new iteration of healthcare?

An excellent article I read, “The Hospital That Could Cure Healthcare,” discussed the Cleveland Clinics’ 2006 transition to “institutes” organized by disease or organ system.  The institutes focus on coordinating care for better outcomes and reducing costs; in fact, it reduced the cost of treatment by 40% in one year.  Improving outcomes and reducing costs just by reorganizing is something worth paying attention to.

Recently, I spoke to Rodger Dix, vice president of finance at Hannibal Regional Healthcare System in Hannibal, MO, a hospital that has shown excellent growth over the years.  When I asked Dix how their service line management structure affected the medical center, he said, “Our service line development is something that came out of our senior management discussions.  In this process, we have placed managers in positions to review the service provided for service lines of the facility.  We did this in order to enhance the services and volumes of patients seen through those services.”

However, one argument is that not every hospital is like Cleveland or the Mayo Clinic.  But, Dix had a great comment on how they address this.  He stated, “Our hospital is not that big but the feeling was that areas where we chose to utilize this form of management are areas that are significant for the potential success of the hospital’s future.  Therefore, there was an expressed desire to improve the offering of services in those areas.”

Two of the driving factors behind the successful transition to service lines include evolving technology and new reimbursement structures.  Historically, hospitals were much simpler, and every department had its own identity, which made service line management more difficult.  Now, under DRGs and APCs, charges and services are often spread amongst multiple departments; patients are treated by a team of caregivers and technology has allowed for the delivery of therapies in non-traditional areas of the hospital.

But bear in mind, the transition to service lines is not that easy.  It’s a team effort from physicians, clinicians, and management.  From what I have seen, there has been a new consulting industry growing to help hospitals either trying to perfect or start new service lines.  With MedPac’s 2010 report to congress focused on quality improvement, you can bet reimbursement will follow.  I will keep you in the loop.

James Laskaris, EE, BME
ABOUT THIS EXPERT
James Laskaris, EE, BME, Emerging Technology Analyst — Mr. James Laskaris is a senior emerging technology analyst at MD Buyline and has been with the company since 1994. With over 30 years of experience in the healthcare field, Mr. Laskaris is the primary analyst of high-end OR technology. He also covers issues related to the legislative and reimbursement effect on healthcare and authors a bimonthly “Issues that Matter” publication. Mr. Laskaris received his biomedical engineering degree from Southern Illinois University. His work has been published in hfm Magazine, Radiology Manager and Healthcare Purchasing News.