4 financial challenges for community hospitals

Community hospitals may be on the healthcare industry's endangered species list, with their survival dependent on the action of their leaders, reports Becker's Hospital CFO.

Community hospitals across the country face numerous financial challenges resulting in some facilities filing for bankruptcy and others to close.Particularly hard hit are rural hospitals, with 50 facilities closing since 2010, according to the article. Community hospitals in states that have not expanded Medicaid programs are under more pressure, as they tend to have a higher proportion of Medicaid and indigent patients.

In addition to states not expanding Medicaid, there are four challenges community hospitals face and must overcome to survive, according to Becker's:

1. A decline in patient volumes. Some community hospitals face financial problems because fewer patients come to their facilities for care. Healthcare reform and high-deductible health plans may cause people to use less services or delay care, Becker's reports. Community hospitals need to look closely at their falling patient numbers and determine whether their market is shrinking or if they are losing patients to competitors.

2. Sizeable capital expenditures. Many facilities shift their capital expenditures from infrastructure to technology, such as an electronic health record system or upgrading a revenue cycle system. Prioritize technology investments based on bottom line impact, according to the article. Community hospitals that can't finance these investments may want to partner or merge with a larger health system that can provide access to more capital resources. 

3. Cost of care. Understanding cost is a big issue for cash-strapped community hospitals, accelerated by the move toward value-based care, Becker's reports. Hospitals need a cost accounting department or tools that allow them to look deeper into their finances to determine whether a service line is profitable. While a cost accounting system is expensive, such an investment could be the difference between a hospital staying viable or closing, according to the publication. With information about the cost of each component of patient care, community hospitals have more clout in negotiating with payers and can formulate cost-cutting plans.

4. High levels of bad debt. One way to keep bad debt levels from increasing is for community hospitals to reduce unnecessary visits to the emergency room (ER). Hospitals need to educate newly insured patients who may go to the ER for care because that is what they have always done. Redirect frequent ER users to other non-emergency care settings. Another method to address the problem of bad debt is to improve billing practices by collecting payment from patients at the point of service.

To learn more:
- read the article

Related Articles:
Mergers key to community hospital survival
Fight to keep community hospital open could bankrupt healthcare district
Rural health crisis: Hospitals struggle to stay open, shift focus to outpatient care 

 

 

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