Advice to Hospitals in a Downturn: “Market the High-Margin Service”
by Maggie Mahar
But one would be wrong. When times are tough, people put off elective surgery, and even avoid going to the hospital in an emergency. Although they may have insurance, often they can’t afford the co-pays that accompany hospital care. As for the uninsured, not long ago a study showed that uninsured patients suffering from gunshot wounds often leave the ER, voluntarily, without being admitted to the hospital.. (I’ll be writing about this study in a future post.)
What can hospitals do? Hospitalimpact.org, a new blog “dedicated for current and emerging hospital leaders, thinkers and enablers” offers some advice:
“In recent months, our industry has experienced unforeseen financial pressures as a result of the economic downturn impacting our patient volumes, operating income and investment income,” Joe Wasserman writes.
“It is easy and more fun to raise revenue than to cut costs,” he adds. “Look at raising prices if feasible. Check on your physician loyalty for additional referrals. Market the high margin services. Consider and evaluate initiating new services and closing non-profitable services.“
Thanks to HealthBeat reader ACarroll for letting me know about this blog. As Carroll observes, the blog isn’t suggesting that a hospital might raise its income by gaining a reputation for “providing the best evidence-based medical care," or "providing the medical care that patients need with the highest attention to their safety to ensure the best health outcomes." (Perhaps a hospital might advertise how infection rates have fallen over two years—and challenge competing hospitals to disclose their infection rates over the same period. Or, a hospital might let the public know that its surgeons use “checklists” to avoid medical mistakes that occur when one small detail slips through the cracks. )
Instead the blog tells hospitals to “sell your most profitable services—and sell hard.”
In addition, Hospitalimpract recommends that hospitals consider closing non-profitable service. This would include burn centers, trauma centers and ER’s – the help that patients need most in an emergency. This is not patient-centered medicine.
As IHI president Dr. Don Berwick observed at a conference last fall: “hospitals need to begin thinking of themselves as cost centers, not revenue centers.” In the past, hospitals hooked on growth have concentrated on expansion and building revenues. In the future, if they want to be part of the solution, not part of the problem, they will focus on making health care affordable and sustainable over the long term. This means slimming down, avoiding purely cosmetic or redundant investments, and learning to make maximum use of medical resources.
“It is easy and more fun to raise revenue than to cut costs,” he adds. “Look at raising prices if feasible. Check on your physician loyalty for additional referrals. Market the high margin services. Consider and evaluate initiating new services and closing non-profitable services.“
Thanks to HealthBeat reader ACarroll for letting me know about this blog. As Carroll observes, the blog isn’t suggesting that a hospital might raise its income by gaining a reputation for “providing the best evidence-based medical care," or "providing the medical care that patients need with the highest attention to their safety to ensure the best health outcomes." (Perhaps a hospital might advertise how infection rates have fallen over two years—and challenge competing hospitals to disclose their infection rates over the same period. Or, a hospital might let the public know that its surgeons use “checklists” to avoid medical mistakes that occur when one small detail slips through the cracks. )
Instead the blog tells hospitals to “sell your most profitable services—and sell hard.”
In addition, Hospitalimpract recommends that hospitals consider closing non-profitable service. This would include burn centers, trauma centers and ER’s – the help that patients need most in an emergency. This is not patient-centered medicine.
To be fair, the blog also offers some very good advice:
- Executive management should reduce their expenses first before asking others to do so
- Minimize the impact on your staff: To the extent possible, avoid layoffs and wage reductions.
- Lower [your] operating expenses. This is not likely [to be] a transitory situation ” Hospitalimpact.org warns, “and ultimately we need to learn how to operate profitably under our Medicare reimbursement.”
As IHI president Dr. Don Berwick observed at a conference last fall: “hospitals need to begin thinking of themselves as cost centers, not revenue centers.” In the past, hospitals hooked on growth have concentrated on expansion and building revenues. In the future, if they want to be part of the solution, not part of the problem, they will focus on making health care affordable and sustainable over the long term. This means slimming down, avoiding purely cosmetic or redundant investments, and learning to make maximum use of medical resources.
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