Hospitals’ financial performance has worsened significantly since the beginning of 2016. According to a recent article in the Harvard Business Review, the main problem is a lack of operational discipline and a disconnect between strategy and market demand. To turn the ship around and become financially sustainable, health systems and hospitals need to revisit their strategies and demand that investments in new payment models and physician employees generate actual returns. Here’s how.
Thus far, mergers and acquisitions have been the consensus strategy. The result? Major health systems have been losing hundreds of millions of dollars in operating losses and in some cases up to 70% declines in their operating incomes. What all these stories have in common is that growth in revenues could not keep up with increases in operating expenses.
So, why have operating expenses ballooned? According to the article, organizations have not adequately managed the size of their workforce, which account for half of all hospital expenses. Many systems have made physicians employees of the system — so called “physician integration” — yet many hospitals are losing around $200,000 per physician per year with no obvious return on investment.
According to Harvard Business Review, if hospitals are going to turn physicians into employees, they must also manage their practices by:
In order for hospitals to be able to transition to a new payment methodology, they need to understand how their costs tie to charges and reimbursement. MedCom analysts can review services to ensure efficiency and charge accuracy as well as pricing that will meet all reimbursement requirements.
MedCom charge capture reviews will ensure that all charges are being processed accurately and efficiently, to reduce additional cost and guarantee all appropriate reimbursement is collected. CMNavigator software will maintain efficiencies long after the MedCom consultant engagement has ended. Learn more.