About a week ago, Standard & Poor’s reported that hospital finances looked better last year than they did 2008. Hospitals are showing “signs of stabilization,” thanks in large part to three factors:
- Aggressive cost-cutting
- Improved revenue cycle performance
- Better returns from their investment portfolios
For any hospital leader reading this, I’m happy for you. Props to all for improving kicking revenue cycle management up a notch. Great to hear that cost-cutting has stabilized your financial picture. And getting more out of your investments — after a period of stunning drops in their value — is nothing but good.
OK, fine — your ship is in order. Now where are your new customers going to come from?
After all, you can only do so much by making use of the resources you’ve got. You can squeeze more money out of billing existing customers and boosting investments — and cut costs, too, t hough that might be your toughest assignment, but without new patients where are you?
Getting new patients, and just as importantly, retaining them, is three-alarm fire important these days.
* Without a new source of income, how will you resume your capital investment program? After all, real estate isn’t going to plunge again in the near future, health IT needs are pressing, and new, cutting edge medical devices going to get cheaper. You can avoid doing some of this spending, but not forever. Then, despite all of your cost-containment work, you’re out of the black and into the red.
By the way, though CMS recently decided that FY 2010 capital payments were OK, the HHS Office of the Inspector General is breathing down CMS’s neck urging it to make further capital payment cuts. I’m not in the loop, in all candor, as to how likely further cuts may be, but I would take this quite seriously.
* Longer term, you need to be thinking about health reform and how that can build business.
While 2014 is a long time from now for patients, it will come almost overnight for hospitals. If you’re planning for that phase of reform, I hope you’re figuring out how to capture the loyalty of the uninsured who will get insurance then.
Maybe it’s a radical idea, but I’d argue that you need to sell your facility even to uninsured patients w ho don’t seem like good bets now. I’ve long argued that in addition to personal touches when patients are at your door, this will take building online communities that link patients to outpatient services, community education and even provide physicians and nurses to answer questions.
After all, even if patients aren’t coming in your doors right now, they can come in your virtual doors and become very comfortable with who you are.
Unfortunately, most hospitals aren’t going to shift gears much; they’re just to addicted to business as usual. I’m not suggesting this blog’s readers are careless or brain-dead, by any means….but I am suggesting that the hidebound facilities they work for may be.
For hospitals who start looking at new revenue streams, and dig out of the bunker mentality of 2007 to 2009, it won’t be a moment too soon. Wait six more months without much effort, and you’ll have your posterior handed to you by nimbler competitors. That won’t be fun, will it?
P.S. Could hospital parking be a meaningful revenue stream? Here’s some thoughts from Dr. Wes.