Despite the grim statistics on new COVID cases, hospitalizations, and deaths during the month of September 2021, new cases seem to have peaked, and vaccination rates are climbing albeit slowly. Forward-looking and progressive healthcare organizations are thinking strategically about the future, and putting plans in place for improved financial performance and profitability in the post-pandemic era.
COVID has presented unprecedented difficulties for the healthcare industry. The various surges over the past 18 months have stressed many hospital systems to their limits. Additionally, the cancellation of many elective surgeries and other patient interactions has gutted revenue streams and added even more stress to providers. Estimates are that hospitals have lost more than $20 billion in revenue due to cancelled and postponed elective procedures alone.
This financial stress has mirrored the personal stress felt by many workers in the healthcare delivery system. Many front-line healthcare workers have become sick from COVID, and many have died. Countless others have decided to leave the industry and find work elsewhere. Employee burnout is a real concern, and replacing these employees will only add to the challenges facing hospitals and other providers.
Despite the extreme pressures on the healthcare industry resulting from the COVID pandemic, an eventual return to pre-pandemic revenue levels is expected to occur throughout 2022, and beyond.
Ten Ways to Improve Healthcare Profits
Here are several ways that healthcare organizations can increase revenue and profitability:
- Fostering long-term patient relationships to increase patient loyalty and referrals
- Focusing on quality of care, as it directly impacts margins and satisfaction scores
- Eliminating unnecessary redundancy in technology and administrative staffing
- Reducing clinician burnout by improving communication
- Understanding your revenue cycles
- Improving your collections process
- Reducing unnecessary testing (“defensive medicine”)
- Investing in IT to improve process efficiency
- Reducing readmissions
- Better prescription processes
Fight Provider Burn-out Through Unified Communication
While the other ways to improve financial performance may be somewhat obvious, tacking the issue of clinician burnout and people leaving the healthcare industry is a less obvious problem that really drags down profits. Some estimates of the cost of burnout are as high as $4 billion across the industry as a whole.
Improving provider well-being and reducing burn-out has been a goal of the industry for years, but the pandemic has amplified clinician stress, and had a significant impact on the health and well-being of providers across the entire healthcare ecosystem. Additionally, clinician burnout leads to treatment errors and other care delivery problems that put patients’ health and lives at risk. Burnout is a response to a poor working environment and missing or inconsistent communication. Healthcare leaders should consolidate technology and implement solutions that unify clinical communication.
Providers frequently employ several different communication technologies – phones, tablets, pagers, email, HER systems, and FAX to name a few. Having to adapt to so many communications channels pulling them in multiple directions adds to administrative overhead, increases frustration, and can inflate IT operational expenses.
Healthcare organizations should look to consolidate communications from their EHR systems and other softwares so clinicians are able to manage fewer communication devices and fewer channels. The additional benefit of these consolidations is the improvement in response times and the resulting improvements in patient care, and patient satisfaction.
Reversing provider burnout and improving revenue starts with improving and streamlining communication.
Effective Collection Processes Drives Profits
Patient collections is an ongoing challenge for the industry, especially with the increase of patients on high-deductible health insurance. At most medical practices, nearly 20% of revenue comes from patient co-pays. Many practices only collect a fraction of what they are owed in co-pays alone. Investing in financial controls and procedures that improve collection of co-pays and other fees that are due upon patient registration will increase revenues and will improve employee satisfaction.
Consider automating your appointment schedule. There are many choices for software tools that allow patients to schedule their next appointment via an in-office kiosk. Patients can automatically be sent a calendar appointment reminder to their phone, tablet, or laptop. This can help reduce no-shows and the incidence of patients showing up at the office at the wrong date and time, and demanding to be seen anyway. These tools improve patient workflow, reduce patient wait times, increase practice efficiency (you can see more patients in the same block of time), and drive higher patient satisfaction scores.
Defense is Good in Football, but not Medicine
Reducing unnecessary testing, also known as “defensive medicine,” should be a major area of focus for practitioners. Doctors may tend to hedge the odds of malpractice lawsuits by ordering unneeded or redundant testing and diagnostic procedures. This adds significant expense to the overall health system, and by some estimates, the cost of these additional tests adds up to more than $5 billion per year. And 3 out of 4 physicians surveyed said that unnecessary testing is a major issue in the overall healthcare system and the increasing costs of healthcare.
Many patients today will do research on the internet prior to visiting their doctors, and will frequently demand tests that they read about online. There is also a lot of television advertising that influences patients to be more demanding about the test they want and the drugs that doctors prescribe. Rapidly expanding office caseloads reduce the amount of time that doctors spend talking to patients, learning about their particular concerns, and focusing on the diagnostic testing needs of the patient instead of trying to cover all possible bases.
Additionally, hospitals can save time and expense through the leveraging of an effective diagnostic expert system. Hospitals that have implemented a diagnostic expert system have reduced the volume of unnecessary testing by over 10% year over year.
Readmission can be very costly for hospitals. Many times, hospitals can’t charge additional fees for readmission, and they can be fined or penalized by Medicaid and Medicare for excessive readmissions. Estimates are that up to 25% of patients who are discharged from hospitals will be readmitted within 30 days. Many of these readmissions are considered to be preventable.
Hospitals can take two simultaneous approaches to reducing readmissions. First of all, hospitals should implement a detailed data analysis of discharged patients to identify patterns and repeat issues that are root causals of readmissions. Improved follow-up care and communication with discharged patients can also help reduce the incidence of patient readmissions.
Technology Can Help the Prescription Process
Another way that hospitals can drive higher profit margins and increase efficiency is through the effective use of technology. We have illustrated some specific examples of useful technology in previous topics. Prescription writing and printing are areas that can benefit from the application of technology. Prescription placement errors can be reduced (can anyone really understand a doctor’s handwriting?) which saves time and money by reducing re-orders. Perhaps more importantly, pharmacy errors that could include giving patients an incorrect medication would be reduced. That would improve quality of care, and reduce the opportunity for malpractice lawsuits that could expose practices and clinicians to substantial financial loss. These systems help providers avoid making common mistakes that can lead to high-cost prescribing behaviors.
Edwards Business Systems can help healthcare providers with solutions that increase security, drive efficiency, and improve profit margins. To speak to one of our healthcare efficiency experts, please click here for more information.