Two Pillars: Cost Containment or Revenue Generation

Far too often we try to make simple things really complex. Healthcare is replete with examples of really simple things that are made much harder than they need to be. For a hospital executive, I recently heard a really simple way to look at the revenue situation of a hospital.

It’s all about Cost Containment or Revenue Generation.

Turns out, these principles apply to any business. Those are the only two ways you can improve the cash flow of a hospital organization. Feels pretty simple, but no doubt there’s a lot of nuance to each category.

As I noted in my post Expense Growth vs Revenue Growth in hospitals, we’re entering a new era in healthcare where a hospitals revenue is decreasing. There are enormous pressures right now to lower the costs of healthcare and that directly relates to decreased revenue for a hospital.

In theory, new ACO models should present some new revenue opportunities to hospitals. Will they completely offset their revenue loss? I don’t think so, but they could provide some relief to the decreased revenue parade. Are you ready for an ACO model of reimbursement?

The EHR is likely to be the foundation of any ACO participation. However, even more than the EHR, the analytics platforms built on top of those EHR are going to really drive a hospital’s success in an ACO. This is why I think so much investment is happening in analytics programs. Watch for even more of it to happen in 2014.

Using our simple explanation, an investment in analytics can make a hospital’s ACO work possible and become a nice revenue generator. Plus, if done right, the analytics can also provide a hospital with cost containment. On face, analytics sounds like a great investment. The problem is that most analytics investments like to talk the talk of cost containment and revenue generation, but in actual implementation they fall well short.

Thanks to government stimulus money, the EHR didn’t have to go through the analysis of EHR as a cost containment or revenue generation mechanism. However, I bet over the next couple years, we’re going to see a lot of questions about how EHR can help in either of these two categories and where it’s hurting these two categories as well.

Where do you think EHR can help with cost containment or revenue generation? Where is EHR having a bad impact on these two areas?

About the author

John Lynn

John Lynn

John Lynn is the Founder of 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.

2 Comments

  • Unfortunately most of an EHR’s resources go into billing/cost control/revenue generation. I think many vendors have forgotten that the purpose is supposed to be improving patient healthcare. The EHR is tying to deal with a faulty system – are you not supposed to treat the cause of the illness, not just the symptoms? A working healthcare model would be a good start, then you can design real EHRs.

  • “the purpose is supposed to be improving patient healthcare”

    Is that the purpose?

    Maybe that’s the problem with healthcare in general. It’s lost sight of its purpose.

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