Healthcare providers are doing what they can to prepare for growth despite the industry’s challenges.
This article appears in the November/December 2019 edition of HealthLeaders magazine.
Market conditions are putting intense pressure on the acute healthcare sector. The shift from the fee-for-service business model has driven down inpatient admissions as patient volumes move to lower-cost settings and payers clench tight fists on reimbursement rates.
This economic scenario causes two challenges, says Michael Browning, MBA, CFO of Columbus-based OhioHealth.
“First, not-for-profit hospitals and health systems are no longer seeing 3%–4% increases in service volume. In many situations, they are seeing reductions in volume. Second, payers are no longer giving what many would deem a fair increase in reimbursement rates,” he says.
Health systems and hospitals are facing a stark choice: cut costs or pursue growth strategies—with growth seen as the more attractive option, Browning says.
“With flat revenues and lower service volumes, growth strategies become more and more important for organizations to be able to afford the infrastructure that they have developed over the years. Many of us have several hospitals and extensive infrastructure; and, in order to afford the replacement of that capital and to give our employees inflationary raises, we’re all trying to improve the growth strategies in our markets,” he says.
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Courtesy of HealthLeaders Media.