Expense Growth vs Revenue Growth in Hospitals

I recently interviewed Alan Kravitz, Founder and CEO of Medsys, and he offered an insight into the challenges hospitals face that I hadn’t heard before. Here’s what he said:

Expense growth is expanding faster than revenue growth for the first time in healthcare.

This is really interesting to consider when you think about the billions of dollars that are being spent on EHR software. Although, I don’t think it’s the EHR expense that’s the issue. Sure, it’s now a part of the cost of running every hospital. Plus, we could certainly argue over whether it’s worth the cost and whether the EHR is overpriced. However, there’s something much more challenging at play.

When you think about the political landscape for healthcare, all you hear about is the rising costs of healthcare. You also hear other things like the huge percentage of GDP that come from healthcare and how we spend so much more money than other nations around the world. With all of these things, there’s a huge drive to stop paying so much for healthcare.

When you look at this trend from a hospital perspective, all you hear is that they’re going to be paying us less for doing the same thing (and some might argue for doing more). With this in mind, Alan’s quote above makes more sense. A hospital’s revenue growth is declining and that’s by design. I’m not sure most organizations are ready for this change.

We’ve long heard about the potential of EHR to lower costs. Considering the pressures hospitals face today, we could really benefit from EHR living up to its potential. If not, I’m not sure where hospitals are going to cut.

About the author

John Lynn

John Lynn

John Lynn is the Founder of the HealthcareScene.com, a network of leading Healthcare IT resources. The flagship blog, Healthcare IT Today, contains over 13,000 articles with over half of the articles written by John. These EMR and Healthcare IT related articles have been viewed over 20 million times.

John manages Healthcare IT Central, the leading career Health IT job board. He also organizes the first of its kind conference and community focused on healthcare marketing, Healthcare and IT Marketing Conference, and a healthcare IT conference, EXPO.health, focused on practical healthcare IT innovation. John is an advisor to multiple healthcare IT companies. John is highly involved in social media, and in addition to his blogs can be found on Twitter: @techguy.

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