Sustained cost pressure and statutory spending cuts in the healthcare system will not allow the financial situation for hospitals in Germany to improve any time soon. With the latest round of wage negotiations raising staffing costs even higher and medical advances and rising energy and material costs continually increasing the cost of materials bill, revenue growth is lagging badly as it continues to be "capped" by the growing gap between revenues and costs.
Other cost drivers include rising caseloads and a shift toward chronic illnesses, coupled with a growing awareness of high-quality care provision. The fact that public-sector hospital budgets have been falling for years and a debt brake has been applied to the spending of Germany's federal state governments from 2020 onward serves only to intensify the pressure on hospitals' investment activities.
To respond to these challenges and face up to the pressure on costs and revenues, not only do hospitals need to continuously improve their operational performance, they also have to adopt the optimum strategic position in the market.
Against this backdrop, the Healthcare Practice at Roland Berger works with clients, hospitals and other healthcare providers of all sizes, both publicly and privately financed, to tackle various strategic objectives and issues. We have a wealth of practical experience to draw upon from having successfully completed numerous medical strategy projects and restructured maximum care hospitals, hospital syndicates and university hospitals.
The topics below represent the main optimization levers for hospitals and other healthcare providers and should give you an initial idea of our consulting expertise. We would be happy to speak with you in person and look forward to hearing from you.
Corporate and medical strategy
Having an overarching goal and a corresponding strategy is the basic prerequisite for any company to move forward. The strategy forms the framework for the evolution of structures and processes and lays the foundation for continued competitiveness. As such, it is extremely important to make strategic decisions on the basis of sound market insight and targeted internal and external analyses. We have supported numerous clients in taking their corporate and medical strategy to the next level. Medical strategy encompasses not only location and network strategies but also service portfolio optimization, the formation of specialized centers, internal and external cooperation and a structured and systematic system of referral management.
See also our THINK ACT on Referral Management (German only).
Performance and efficiency optimization
There is improvement potential in any hospital; in many cases it is very apparent, while in others the issues are complex and therefore harder to pin down. Particularly in the latter case, it will be necessary to systematically and objectively analyze the organization or unit concerned in order to uncover and remedy any shortcomings.
In our efforts to identify revenue-enhancing or cost-cutting potential and ways of optimizing processes we leave no stone unturned as we work to create transparency concerning the status quo in our client's organization as a first step. Building on this foundation, we are then able to identify many areas of improvement potential, drawing also on industry benchmarks and internal/external interviews, etc.
The close and trusting relationships we've built with our clients' staff in countless projects have enabled us not only to highlight the potential but also to deliver the improvements. Our outstanding implementation expertise is also reflected year in, year out in Prof. Fink's (Bonn-Rhein-Sieg University of Applied Sciences) annual consultant rankings published in Manager Magazin (Roland Berger is the no. 1 consultancy for implementation).
Our proven strategic restructuring approach for hospitals, which integrates both strategy and efficiency considerations, has enabled us recently to bring many large restructuring projects to a successful conclusion in cooperation with our clients.
Faced with negative net income several years in a row and a progressive reduction of shareholder's equity, a company's management and supervisory board will usually decide to initiate a restructuring program. Many factors are invariably to blame for the negative developments and the causes need to be sought on both the strategic and the operational side of the business and in internal and external sources. We begin any strategic restructuring with a comprehensive analysis of the initial situation, which enables us to identify internal weaknesses, alongside strengths, and to assess the wider development of the market/competitive environment. In parallel, we take internal and external factors into account in identifying the financial and economic challenges of the coming years, thereby creating clarity about how big the earnings gap actually is.
This insight puts us in a position to derive the strategic levers that are available, along with a strategic vision that should enable our client to successfully position itself in the market in the medium to long term. The knowledge gained is also used to work out the operational levers that can be applied in the short to medium term, which we address in dedicated projects in which our client's staff work together with our experienced consultants. We also identify and initiate a number of quick wins in parallel, which incorporate revenue-enhancing and cost-cutting measures with a near-term effect on earnings, and also financial levers for liquidity improvement.
The scale of the required earnings improvement within the coming years and the effects of the operational levers are simulated in a business plan. The close involvement of the main stakeholders right from the start is a key success factor – the board/management team, the supervisory board/owners, the banks, the works council or staff council, and naturally the staff themselves.
Our outstanding restructuring expertise is also reflected year in, year out in Prof. Fink's (Bonn-Rhein-Sieg University of Applied Sciences) annual consultant rankings published in Manager Magazin (Roland Berger is the no. 1 consultancy for restructuring).
Continuous project support
In many projects we employ what's known as the "TVIR" logic, which stands for targeted, validated, implemented and realized effects. Extensive benchmarking enables us to identify the various potential available, which is used as target figures for prioritizing future projects. These projects then go through an approval process after having specific measures defined for them on the basis of detailed analyses – thus validating the project effects. Implementation is the next step. Even after successful project implementation, effects are not always immediately visible in the income statement – and they are not classed as realized project effects until they are.
This path from identifying to realizing earnings improvement potential is time consuming and prone to resistance. So it is all the more important to ensure that a feasible plan is put in place and restructuring measures are approved right from the start. Limited availability of internal resources, resistance to change and the fact that these matters eventually come lower down the management's list of priorities are among the reasons why projects are sometimes not implemented in full.
Not only does that leave valuable potential untapped, it also gradually diminishes the workforce's confidence in the ability of their organization to change. Only stringent action tracking and management can safeguard that.
The establishment of a program management office (PMO) to serve as an interface between the projects and the management is a crucial success factor. It is the PMO's job to clearly define the owners, specific timetables and monetary potential of the projects. The PMO also monitors and supports project and action implementation. Our computer-based project management tool and control instrument, RBpoint , enables us to ensure that all involved members of the organization are kept informed of the current project status online in a clearly understandable and visually appealing form.