In today’s economy, many hospitals, especially in rural areas, are in financial binds that threaten their futures. According to a study conducted by Black Book, “87% of small and community hospitals anticipate declining-to-negative profitability through 2015.”
Why are these hospitals losing so much money, and how can they keep their doors open? It’s important for hospital CFOs to be aware of the reasons for declining revenues and know that there are solutions available to help them turn their financial state around.
Why Are Hospitals Hurting?
There are a number of reasons why healthcare facilities’ revenues are on a downward slope, including:
• Healthcare Reform – With the integration of the Affordable Care Act and healthcare reform, there are a lot of Americans who either can’t afford health insurance, or have such high deductibles that they can’t afford to pay for their medical bills. In the worst-case scenario, the high cost of healthcare deters Americans from getting the treatment they need. In other instances, they do seek medical attention and get stuck will a bill that they can’t pay off. Both situations put hospitals at a financial disadvantage.
• Declining Patient Retention Rates – Hospitals are losing money due to low patient retention rates. Of all of the patients who didn’t return to your hospital, approximately 70 percent left because they felt indifferent about the experience your hospital provided. Patients know that they have multiple options for their health and medical needs, so to keep patients coming back, hospitals need to stay competitive and offer an unbeatable patient experience. (Review our tips for helping to improve your hospital’s patient retention rates.)
• Yesterday’s Technology – According to a survey conducted by the Ponemon Institute, “U.S. hospitals are absorbing an estimated $8.3 billion annual hit in lost productivity and increased patient discharge times” due to outdated technology. Not only does the lack of modern technology directly hurt hospitals financially, but it also negatively affects patient retention rates. Advanced healthcare technology helps hospitals stay competitive in the marketplace and improve patient experience. Hospitals that fall behind and have outdated technology will have an extremely hard time allocating the funds to make costly updates, so it’s critical to stay on top of the latest advances when they come out.
• Delinquent Payments – When patients can’t afford to pay their medical bills, the consequences fall on the hospital. Every bill that goes unpaid extends hospitals’ revenue cycles and causes the bottom line to shrink. With more and more patients being unable to afford their medical bills, delinquent payments are becoming an ever-increasing burden for hospitals.
Keeping Your Doors Open, One Payment Plan at a Time
Medical payment plans (MPPs) are an innovative solution for improving hospital cash flow. These payment plans break up the balance of the patients’ portion of uninsured medical expenses into a series of more manageable, low-interest or interest-free payments, giving patients the ability to make payments on time.
The bottom line: When patients can pay for their healthcare bills, it means more money flows back into hospitals’ revenue stream. By offering MPPs to patients, hospitals can secure a more reliable revenue cycle, and ultimately keep their doors open.