Healthcare employs more people than most other sectors of the U.S. economy. Spending is predicted to rise to $2.6 trillion this year and account for 18% of the gross domestic product. There are certainly plenty of opportunities to earn a good living taking care of others.
If asked, however, most people in healthcare would presumably say their initial reason for working in the industry had something to do with helping or caring for people. This is one of the reasons our nation's healthcare is the best in the world. It can at times also create an unintended conflict with a provider's fiscal health. Patient care and even certain aspects of patient satisfaction are completely dependent upon a facility's financial well-being.
In the past several months we've seen an assortment of macroeconomic factors affect hospitals, physicians and other providers' abilities to provide care and sustain their operations. Medicare and Medicaid reimbursements continue to decline. Investment income is disappearing. National unemployment is higher than it has been in many years, adding to the record count of uninsured Americans who still need care. Admission volumes are down. The increasing popularity of consumer-directed care, high-deductible health plans and health savings accounts has created more patient financial responsibility and less reliance on insurer reimbursements.
These factors have made an already complex and difficult proposition for healthcare providers even more overwhelming. Cancelled or delayed capital expenditures, layoffs, program cuts, and even bankruptcies and closures continue to dot the headlines. According to Thomson Reuters more than half of U.S. hospitals are reporting operating losses.
In many ways the healthcare industry's reaction to the current economic situation is telling of pre-existing problems. Many hospitals that entered the downturn in poor financial standing have simply not been able to endure the added pressures. Holes in hospitals' administrative and financial practices have been exacerbated. Best practices still exist, though, amid all the doom and gloom; according to the same Thomson Reuters report the half of the nation's hospitals show a profit, so they must be doing something right.
At the most fundamental level, in order to maintain long-term operational viability hospitals have to rededicate themselves to the financial side of healthcare. The hospitals currently operating at a profit presumably carried out this approach in times of prosperity and as a result are better prepared to weather unforeseen and uncontrollable financial pressures. That's not to say patient care should not remain priority one, but if the books consistently bleed red then there is ultimately no chance of fulfilling the core mission. Providers must operate as businesses first—even not-for-profits—and help their patients understand that without adequate payment for services they will cease to exist.
This is a real paradigm shift for many providers, but is never more true or important. During the more than 35 years I have worked in healthcare, I have seen the industry move through numerous peaks and valleys and each time have been fortunate to witness some best practices from providers who emerged successful. Healthcare may be more resistant to the cycles of our economy than some other industries but is clearly not immune. The one common denominator for successful providers is a strong emphasis on the financial side of the business, which naturally allows for better patient care and even patient satisfaction. In my experience there are several specific strategies providers use consistently to manage this balance.
Enhance internal processes to capture all reimbursements
Within an organization's existing patient population there are usually opportunities for additional revenue that can be capitalized upon with better processes.