Outlook 2011: Reform Uncertainty Clouds Healthcare's Future

Georgie Shockey

Georgie Shockey is a principal with Ruck-Shockey Associates, an operational consultancy whose work is primarily in healthcare. FM interviewed her for a take on the issues that would have the most impact on acute care operators in 2011.

The biggest driving force in healthcare today is the ramping up of healthcare legislation, and most significantly, the Patient Protection and Affordability Act. Many of the implications are uncertain at this point, but consider its nutrition labeling laws. If a chain has more than 20 sites it will need to have nutritional data about its food posted on the menu. Until the rules are worked out, it is unclear what kinds of operators are included. For example, is a contract management company, with centralized resources, a chain?

It appears that the requirement doesn't apply if you have a menu that is constantly changing. But does that mean that Jello, which may be on a menu every day, must have nutritional data posted while a chef's special does not? It is also not clear how money will be appropriated to enforce such rules, so implementation will likely lag with great regional differences.

I think healthcare operators need to be pro-active about this. As commercial chains implement the rules, customers will begin to expect the information more widely. And in healthcare, where many operators would prefer to lead this trend, not follow it, they will benefit by pioneering ways to practically communicate nutritional information even if the rules haven't been totally vetted out.

Reimbursement rules for hospitals will also be changing, but again we don't yet have much clarity about how and in what ways. There will obviously be a big push to cost reduction or containment, depending on how you choose to describe it. That will mean taking a very hard look at the cost of operating every department and of providing every service amenity.

For example, room service programs and any kind of concierge service — meals for new fathers, fruit baskets, etc. — are going to be really scrutinized. Are they truly delivering bottom-line results? Are they contributing very significantly to patient satisfaction? In either case, they will have to be clearly justified to keep them in place.

I see a bit of moderation in the room service trend. For example, 24/7 room service programs, which did exist in a few high visibility operations, have had their hours of availability reduced. Many room service programs that began with a large selection of menu items have seen that selection curtailed as less popular choices have been pruned to focus on a more reasonably sized menu for a given operation. This kind of rationalization can help with efficiency and improve deliverability.

Central production will continue to have a lot of appeal in the new environment because of the efficiencies it brings, especially for high volume and core center-of-the-plate items. The caveat is that operators need to preserve some a la carte or a la minute finishing work capabilities to preserve the level of quality that they are striving for.

The ability to deliver retail bottom line growth is a strong advantage for a foodservice department. Especially in major hospitals there is a growing recognition that there can be a significant value to bringing revenue into the hospital this way. Other than the possible labeling requirements, that kind of revenue is not going to be regulated in any way, which makes it unique in the context of healthcare.

What everyone in hospital foodservice needs to stress is net cost per patient day and the impact strong retail sales can have on that net cost.

Many healthcare facilities are aging because so many of them were built following the Halliburton Act in the 1950s. A lot of those that are now beyond their original life expectancy are in a growth or redevelopment mode and the associated facility upgrades can open up opportunities for foodservice.

Operators need to tag onto those whenever possible by communicating the idea that modest space allocation for retail venues can have a significant long-term impact in terms of controlling the hospital's net cost per patient day figures. The message should be — invest in retail now for long-term impact. Our experience is that for added retail space with projected growth of 20 percent in retail sales will often turn into 30 percent or more with a good operator in charge.

Food trends in healthcare will be driven not only by more fresh prepared food but also by increased association with sustainable practices and the menuing of foods tied to healthcare outcomes by research. Nutritional research into micro-nutrients and botanicals that show their impact on health and nutrition will spur this and provide promotional and educational opportunities for foodservice departments.