Q:  How can hospitals survive in the face of substantially increased revenue pressures?

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By Cliff Frank

Some of them won’t.  But the ones that will survive will be those that reach out now to do three key things:

• Aggressively manage their internal costs.

• Build strategies to hang on to patient volumes they have now.

• Find creative ways to grow new patient volume now and for the future.

Hospitals have become more advanced in how they track, manage, and flex their variable costs as volumes move up and down.  The next level of challenge is to address fixed costs and how such costs can be restructured to become variable, or reduced in other ways.
Many in hospital leadership quietly assume that their Medicare volumes are stable and assured.  The ACO initiative by the feds showed the vulnerability of that assumption because a PCP could switch their allegiance to another ACO very easily and that patient volume could move overnight to a different facility.  Although ACOs remain stuck on the federal launching pad, the vulnerability of existing Medicare patient volume remains.
Growing new patient volume in this new environment means that volume will have to come from some other facility.  Most markets are not growing, and physician supply is not expanding.  Traditional ways of growing volume – buying practices and realigning them with the hospital, planting new physicians in an adjoining community, or tying up  facilities in outlying markets are strategies grounded in yesterday’s premises, not this new reality of scarce capital, declining reimbursement, and an undersupply of physicians.
Repositioning the hospital as a patient advocate between the payer and the patient opens the door to a new set of relationships with patients, both existing and new.

 

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