September 23, 2019

Continued Relevance, Value and Complexity of Service Lines

The shift towards alternative payment models has illuminated the necessity for healthcare leaders to re-evaluate the strategic importance of clinical service lines. Across the industry, executives are asking similar questions: how should we align service lines to support shifts in site-of-care and advancement of goals, what is the optimal structure and how do we cultivate dyads leadership models to support cross functional collaboration, and how do we prioritize service offerings to ensure quality and financial solvency.

While there are many points of discussion and opinions, the following abbreviated case studies highlight both the value and complexities of service line rationalization and alignment to support strategic prioritization.


Service Line Rationalization

A service line portfolio review is a valuable endeavor to support leaders in making informed decision regarding the elimination of services that are, redundant, low volume, lack local demand or have a negative net margin, while ensuring the medical needs of a community are met.


ACS Verified Level-II Trauma Center, Hold or Fold?

A 475-bed community hospital located in the mid-West had been operating a well-established ACS verified Level-II Trauma Center for more than two decades. The leadership team debated the financial feasibility and relevance of continuing as a Level-II Trauma Center with regard to the high cost associated with specialty call pay, staffing requirements to support the program, and degree of market saturation within the catchment area.  In consultation with the leadership team, we conducted a comprehensive review and modeled three scenarios: (1) continue as a Level II Trauma Center, (2) downgrade to a Level III Trauma Center, or (3) close the Trauma Program, and evaluated the impact of each decision on the community at large.

Highlights and final recommendation from the Trauma Service Line assessment were as follows:

  • The data showed a steady, positive trend in patient volume, year over year.
  • While the program yielded a net positive contribution margin, it was slim. However, opportunities were identified to optimize the financial performance by improving the billing workflow and revising specialty call coverage.
  • The program had excellent patient care statistics based on positive TQIP results and a recently implemented fracture protocol resulted in a decrease hospital length of stay from 4.5 days to 4 days.
  • A market review of the competitive landscape would most certainly have yielded an organic shift of patients to the nearest higher level of care, should the decision be made to downgrade the program to a Level-III Trauma Center.
  • Despite perceived market saturation, analysis of the catchment area supported the value and community need to continue trauma.

Based on the finding of the Trauma Service Line rationalization assessment, the unequivocal recommendation was to maintain their ACS-verified Level-II Trauma center designation.


Aligning Service Lines to Advance Strategic Goals

Historically, healthcare leaders have focused on revenue generating service lines, such as Orthopedics and Cardiology, to financially sustain their organizations in the fee for service environment. As the industry is rapidly evolving towards cost transformation, many organizations are viewing the emergence of service lines, such as Geriatrics and Primary Care, as a necessary model for advancing goals of strategic importance.


Geriatric Consult Program in the Emergency Department

A large healthcare system located in the Northeast, strived to decrease unnecessary hospital admission/re-admission rates, among other initiatives. They instituted a Geriatric Consult program in three emergency departments serving a dense geriatric population. The program was led by a board certified Geriatrician and designed with the following characteristics and results.

  • A screening process was instituted for high risk patients.
  • The EDs were staffed with Geriatric APRNs, with backup from Geriatrician.
  • Geriatric consults are billable, maintaining budget neutrality.
  • Realized a decreased ED recidivism by 3-7%.
  • >60% of patients evaluated had no need for hospitalization.
  • 85% of patients had changes with medication reconciliation.


Marcia Messer MBA, MHA

Healthcare Executive Consultant

Marcia Messer MBA, MHA



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