Hospitals face multiple revenue and expense challenges that underscore the need
for cost transformation.
According to Kaufman Hall, profitability declined again in August 2019 as patient
volumes began to soften. EBITDA margins declined 9.4%, while operating margins
declined 11.4%, demonstrating how closely volume and profitability are linked.
In June 2019, adjusted discharges dropped more than 5%; operating room minutes declined 7% vs May 2019. In the Midwest, where revenues were flat as bad debt and labor costs were on the rise, hospitals had pre-tax margins that were nearly 3.7% lower.
A 2019 Kaufman study listed the concerns of hospital executives:
Flat or declining inpatient volumes.
Downward pressure on commercial insurance rates.
The self-pay aspect of reimbursement (high patient co-pays).
Increasing percentage of Medicare and Medicaid patients.
Rising salary & wage inflation...up 4.9%. (Wages are 60% of expenses.)
Demands for capital to fund strategic initiatives.
Are declining volumes unique to my organization?
If so, is the volume decline a result of internal factors?
Could external factors explain the decline?
What are best strategies for us for service line growth?
Consult external benchmarking.
Get reliable, trustworthy internal data.
Complete a comprehensive analysis based on that data.
Learn to predict volumes and react to these changes (create a 5-year plan).
Engage hospital staff in setting performance improvement goals.
More effectively engage physicians in accountability objectives.
Pro-actively ask patients for payment prior to providing service.
We welcome your comments and questions
contact Donald Tapella at Medical Recovery Services