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Healthcare services are always going to be needed, and prices will get higher with time; in fact, "Reimbursement just keeps growing over time, say the critics. A Washington Post analysis of records for 5,700 procedures reportedly showed that work RVUs are seven times likelier to increase than to fall" (Baltic, 2013.) The question that is needed to be asked is: What actions can be implemented in order to change and improve the current healthcare problematic? Here are some of the factors that can influence it:
1) Geographic position: The better positioned and available the hospital is, the more consumers can access to health and promote business. There are some other interesting choices that places like Oregon has implemented to help Medicare rates and allow more patient to be seen in community hospitals, which is known as a new Accountable Care Collaborative program "allowing to connect healthcare providers as well as social services and community-based assistance" (Johnson, 2013.)
2) Physician Alignment: Great physicians increase the visit numbers due to high success rates, which contributes to more financial stability and solvency for the hospital.
3) Cost structure: "Hospitals with a high-cost structure either due to high debt, high employee costs or the inability to amortize costs over larger revenues are more susceptible to bankruptcy" (Becker & Dunn, 2010.)
4) Quality of services: low-quality care increase bad reputation, which means no clients for the hospital. High mortality or nosocomial infections equal to poor care as well.
What do you think? Is it necessary to invest more in healthcare workers to increase patient satisfaction? Will that helps the quality of care? What do you think will happen with your cost structure?
Thanks
Reference
Baltic, S. (2013). PRICING MEDICARE SERVICES: Insiders reveal how it's done. Managed Healthcare Executive, 23(11), 28-40.
Becker, S., & Dunn, L. (2010, September 30). 7 Factors to Assess the Sustainability of a Hospital. Retrieved from https://www.beckershospitalreview.com/hospital-management-administration/7-factors-to-assess-the-sustainability-of-a-hospital-assessing-a-hospitals-viability-its-financial-situation-and-the-severity-of-the-threats-it-faces.html
Jonhson, S. R. (2013, September 09). Controlling costs. Modern Healthcare, 43(36), 7-12.
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When there is more of a demand for health care services, organizations can see that there is more of a need to be cost efficient because there needs to be a balance between the cost that is made when using resources and as well as providing health care to our patients. Instead of breaking even, organizations should consider making revenue so that they can offer adequate pay for staff, allow for departmental growth with expansions and update supplies and technology to be competitive among other hospitals in the area.
As stated in our classroom textbook, Essentials of Healthcare Finance (8th Edition) written by William Cleverley and James Cleverley, financial viability is defined as, “In the long run the HCO must receive dollar payments from the community in an amount at least equal to the dollar payments it makes to its suppliers. In very simple terms, this is the essence of financial viability.” Financial viability is a way to state that the HCO (Healthcare Organization) must break even with their net income and loss. Factors that impact the organizations financial viability are durable medical equipment, hospital care, and physician and clinical services to name a few which were derived from Table 3-2 from our classroom textbook, Essentials of Healthcare Finance (8th Edition) written by William Cleverley and James Cleverley.
Durable medical equipment allows for providers and clinical staff to provide care appropriate to the patients need from Foley catheters, gloves, saline bags to bed pans and catheter needles. Supplies come with a cost, it can become expensive and from my experience in the Emergency Room we tend to switch supplies around to save cost, the quality may lack from the previous material provided but it does get the job done. The cost of materials that is provided to the patients though I must say is shocking, the typical cost of a bag of saline is around $50 but covered by insurance while a visit in the Emergency Room can cost around $5,000. How much of that money is profit, I have no idea but typically insurance or Medicare and Medicaid cover the costs.
Hospital care and physician and clinical services go hand in hand. The cost with a visit to a department is determined by all the factors that I stated above but again I am not sure what the cost break down is for a patient visit. I would assume in that $5,000 visit seeing the physician and having a work up done as well as having the clinical staff tend to your needs is included. It is nice as staff that regardless of if a patient pays or not, we all still get paid.
Cleverley, W. O., & Cleverley, J. O. (2018). Essentials of health care finance. Burlington, MA: Jones & Bartlett Learning.
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There are 7 factors that play into an organization’s financial viability: location, building condition, physician relations, cost structure, reimbursement, management, and quality of care (Becker, Dunn, 2010). With so many ways for financial viability to be impacted its vital that hospitals remain efficient in all areas of operation. With just one area not running efficiently financial viability begins to erode, combined with multiple sectors the effects accelerate.
Anyone opening a business has heard the saying “location, location, location”. In order to be successful an organization must be properly located in order to capture clients. Even hospitals providing highly sought services are not exempt from this. People are more likely to avoid seeking care if the distance to the facilities location is not convenient. For example, individuals 65 years and older are only willing to travel 26.4 minutes for urgent care (Yen, 2013). With an aging population, facilities within the travel distance of this group of individuals are likely to receive far more visits, resulting in higher revenue streams.
The median average age of buildings for U.S. hospitals have increased by approximately 3 years (9.8 to 11.48) from 1994-2015 (Bardwell, Beebe, Donna, King, Schomel, 2018). From 1994 to 2015 leaps and bounds have been made in energy efficiency and building materials. As a facility ages energy consumption along can skyrocket, resulting in increased expenses. Furthermore, aging facilities may not be able to support the demand for new and efficient technology due to design. While there are several reasons an aging facility these provide insight into how aging buildings impact financial viability.
Physician relations play a vital role in financial viability. Without physicians’ referrals to the hospital would be severely impacted. Equipment would run below projected utilization rates, causing the cost of services to skyrocket.
The types of reimbursement a hospital receives can force it to become very efficient. Facilities located in areas of high Medicare and Medicaid patients are often bound to what the government pays for services. Where permitted the billing for excess services expenses is often not recuperated due to their low-income statuses. Leading to increases in charity care and bad debt write offs. While a hospital may be able to offset these losses through private insured patients if the balance of private vs public reimbursements is not in the hospitals favor efficiency is the only way to stay financially viable.
Cost structure can certainly be a problem within the health care industry. With fluctuating patient volumes high costs in areas such as employee wages, benefits, and retirement plans, can at times become an issue. Managing these costs and ensuring the hospital has enough funds on hand to cover these expenses plays into financial viability.
Management in any industry can make or break an organization. These individuals are vital in implementing the policy and organizational culture that promote efficiency and quality of care. In creating operating policies management can stem the flow of inbound and outbound supplies to help reduce costs. They also control the utilization of employees as mentioned above can become costly.
The quality of care can also impact a hospitals financial status. If care is viewed as poor the inflow of patients is likely to diminish over time if the care quality remains low. When a facility becomes labeled as a poor-quality provider the time it takes to overcome that label is lengthy. Depending on the current financial status a hospital may not have enough revenue to stay operating long enough to overcome such presumptions. Like some of the other factors above with low patient numbers the cost of every other sector of a hospital increases in expenses.
While brief its easy to see that one or all these factors can lead to a downward spiral in a hospital’s financial viability. With each tied to another in some way even a gradual decline will eventually pull the rest down with it, resulting in the closure of the facility if left uncorrected.
Bardwell, P. L., Beebe, C. E., Donna, V. D., King, D. D., & Schomel, J. L. (2018, January 8). A closer look at U.S. health care infrastructure. Retrieved June 6, 2019, from https://www.hfmmagazine.com/articles/3239-a-closer-look-at-infrastructure
Becker, S., & Dunn, L. (2010, September 30). 7 Factors to Assess the Sustainability of a Hospital: Assessing a Hospital's Viability, Its Financial Situation and the Severity of the Threats it Faces. Retrieved June 6, 2019, from https://www.beckershospitalreview.com/hospital-management-administration/7-factors-to-assess-the-sustainability-of-a-hospital-assessing-a-hospitals-viability-its-financial-situation-and-the-severity-of-the-threats-it-faces.html
Yen, W. (2013, April). How Long and How Far Do Adults Travel and Will Adults Travel for Primary Care? Retrieved June 6, 2019, from https://www.ofm.wa.gov/sites/default/files/public/legacy/researchbriefs/2013/brief070.pdf
