Are your Medicare patients causing financial losses at your hospital? It’s not uncommon to hear of hospitals losing money due to Medicare. However, this can become a major issue by damaging your ability to serve all your patients when there isn’t enough funding to go around. Fortunately, there are ways for your hospital to navigate these financial losses while still serving all your patients well. In this guide, we’ll walk you through what your Medicare hospital can do to keep offering the services patients need without losing money. Keep reading to find out how to stay profitable!
Why Medicare Financial Losses Happen
The Medicare patient numbers are growing each month, and hospital struggle to manage the patient load. However, the matter is complicated by the fact that the program’s rates of reimbursement are a major cause of hospitals losing money. Hospitals actually lose more money from treating Medicare patients than from treating Medicaid patients, it turns out. According to the report that announced these findings, U.S. hospitals were out more than $40 billion from Medicare patients’ treatment, compared to $15 billion from treating Medicaid patients. Because of the fixed rate of reimbursement given to Medicare patients, hospitals have to take careful steps to manage the price of providing care to these patients. Otherwise, the entire hospital could be put at risk as it starts to sink financially. How can these financial losses be combatted? Let’s take a look at some strategies that will be effective.
1. Look at the Data for Potential Profits
Hospitals have plenty of data, but whether or not they use that data effectively is another story. Use the power of analytics to find potential areas to save money or reduce costs. A close examination of the data will usually reveal some cost-cutting areas that are effective for all patients across the board. For example, some hospital executives use the data to figure out how to streamline operations and find places to cut costs for the foreseeable future.
2. Reduce Corporate Overhead Costs
Hospitals are often fighting to compete, which means maintaining a sense of state-of-the-art innovation to attract patients. However, this can become a major source of costs. Your hospital is probably spending on fancy IT security systems, data systems, HR departments, new digital tech, and investments into compliance. These costs tend to go up year after year as your hospital strives to stay competitive, which means your corporate overhead may be going up by as much as 10 percent each year. The costs can quickly outpace the growth of your revenue. When this is combined with financial losses from Medicare treatments, your state-of-the-art hospital may find itself in dire financial straits. It doesn’t matter how cutting-edge the equipment and services are when the hospital is hemorrhaging money year by year. You’ll need to work to control these costs, even if it means giving up on always having the latest and greatest equipment. Functional equipment doesn’t need to be the most high-tech to serve its purpose. One effective way to start cutting these costs is to figure out which part of the hospital’s organization has responsibility for making these spending decisions. Sometimes, it may become more cost-effective to outsource certain functions, such as IT security, rather than doing it all in-house.
3. Reduce Use and Purchase of New Medical Tech
In addition to spending on corporate overhead, the investment into new medical technology can quickly take its toll on a hospital’s budget. Medical tech and supplies often eat up a large percentage of the operation’s budget. It’s important to work closely with your clinicians to review each new technology purchase based on the evidence that it’s needed. Work to reach a consensus of the hospital staff on these tech reviews, and find the lowest prices for whatever the organization decides is necessary. You should also work with both clinical consensus and scientific research to buy necessary drugs at the lowest possible cost, as well as tightening the drug formularies. Hospital review by patients make it critical for hospitals to offer competitive technology and services, but not to the detriment of the overall budget. Your hospital can offer the highest quality care without always buying the newest medical tech on the market. Use the advice of your clinicians to find out what investments will best help your patients.
4. Create Blueprints for Treatment Methods
When different clinicians approach treatments in different ways, the cost of operations can soon rise. You’ll save money by creating detailed blueprints for how each condition must be treated. Start by blueprinting the most common conditions, since those are the ones most likely to be encountered by multiple physicians. Make those blueprints cover not just recovery, but also post-intervention and even rehab, to eliminate or reduce variables in care. This is a highly effective way to combat financial losses by lowering costs. Integrate these plans into your hospital’s EHR to make sure that no matter who the physician is, the proper treatment blueprint will be followed.
5. Make a Plan for Clinical Discipline
Finally, your hospital must ensure that these new blueprints and rules are being correctly followed. Give responsibilities not just to the physicians, but to advanced care nurses, care coordinators, and physician assistants to help keep expenses to a minimum. It’s nearly impossible to treat Medicare patients without losing money, so these other methods of cutting costs must be enforced to make meeting patients’ needs possible now and in the future.
Getting Your Staff on Board
Reducing Medicare financial losses is all about getting the staff working together to agree on solutions and enforce them. Without the team on board, it’s nearly impossible to put these tips into practice. One great way to approach your hospital’s finances is with intimate meetings with the financial department. Learn more about this approach here.