Fierce-Health Finance, a newsletter published two times per week discussed today the four financial challenges facing community hospitals. Community hospitals are the smaller facilities usually non-teaching institutions in the 30-100 bed range. Most often these medical facilities do not have the advantage of municipal finance (quite inexpensive) or other capital market strategies.
In its discussion Fierce cites decline in patients due to competitive, less expensive services as one cause. Additionally, healthcare reform is requiring high deductibles and causing less services or delays in accessing needed care.
New technology from electronic patient records to advanced diagnostic and treatment machinery pulls cash from the bottom line accounting for the second challenge. Infrastructure expenses required to comply with newer and safer facility operations adds more stress to an already ailing cash position.
The ever present cost of care discussion is number three on the list of issues facing the community hospital. Determining which procedures, services and treatments make good business sense to provide has to be an objective decision and many such hospitals kick that decision down the road hoping that the good press these non-profitable services produce will result in better daily census numbers. This unfortunate situation however is not going away so ultimately the decision must be made.
The last and certainly not the lease of the four challenges is the bad debt that hospitals carry. The service provided by the hospital that is usually the largest collector of this bad debt is the ER. Patients using this service for non-emergency reasons usually have no or very little insurance. Expenses do not get paid since the debt for ER services is not paid. Fierce points out that patients have to be re-educated regarding the function of an ER and what alternatives a patient has depending on the health issue being treated.
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