Looming Budget Cuts Make Hospital Belt-Tightening Increasingly Difficult

John Commins, for HealthLeaders Media , March 5, 2012

Moody's noted that the Medicare Payment Advisory Commission in January recommended a Medicare rate adjustment of 1% for the coming budget cycle, which is less than half the rate of inflation in the overall economy.

Lisa Goldstein, associate managing director at Moody's, told HealthLeaders Media that hospitals have done a good job confronting cost growth. "Low-hanging fruit examples would be reductions in work force, not filling existing positions, matching clinical needs with nursing skill sets better, looking at supply costs, negotiating bigger discounts with vendors, buying in bulk for example," Goldstein says.

However, she believes the "wrenching change" that hospitals may now have to undertake will be considerably more involved.

"'More wrenching change' speaks to the next level of cost reduction and expense management, which is more about gaining efficiencies. That is taking apart the fundamental basic building blocks of patient care and recreating them all over again in a more efficient manner," she says. "We have heard from providers across the country, examining how they deliver healthcare, the processes, the operations, the patient flow to become more efficient and extract permanent savings that way."

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1 comments on "Belt Tightening Gets Tougher for Hospitals"

ANTHONY WUNSH (3/11/2012 at 10:38 AM)
The area they can have the most impact on to reduce these potential challenges is revenue cycle. There is billions in wasted costs, and hundreds of billions in uncollected dollars. Slow pay and no pay by both patients and insurance and government is an epidemic and can not be sustained. I have been preaching for three years, we need to impact what we have control over and the processes used to manage revenue cycle are out dated, inefficient and broken, They were never designed to handle 31% patient responsibility or the additional mandates in audit, meaningful use and technology. WE lose in wasted cost or lost revenue over 800 billion dollars a year now, imagine this impact on the cost of care delivery. Also in charitable care the cost to process and time to process these patients is so cumbersome that more than 80% never get processed and these dollars are just written off. I would love to share more if you request it




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