Factors contributing to hospital closures in the US and how to overcome them?

According to Becker's Healthcare (Hospital Review), 7 hospitals were closed in 2021. The number is much lower compared to the year 2020 where 14 states reported more than 20 hospital closures.

But what are the factors contributing to these hospital closures? Here are some of them:

• Decreasing payer reimbursement
• Increased labor cost and supplies cost
• Difficulty recruiting and retaining healthcare staff
• Hospital staff including physicians, Physician Assistants, Nurse Practitioners, Registered Nurses, and other essential healthcare staff were let go due to vaccine mandates
• Increased fatigue of operations staff resulting in lower productivity and quality
• Increased cash-pay patients? and increased bad debt from patients
• Increased claim denials and many others

I recently read a report published by Kaufman Hall’s “National Hospital Flash Report”2. The report stated that “Hospitals in the West had the biggest increase in labor expenses for the month, with Labor Expense per Adjusted Discharge up 28.8% YOY.” The same report also shared the findings that “total Expense per Adjusted Discharge increased 24.7%, Labor Expense per Adjusted Discharge rose 26.4%, and Non-Labor Expense per Adjusted Discharge increased 20.5% relative to pre-pandemic levels in November 2019.” I think, with the COVID cases rising and evolution in the variants, these numbers are just going to go high in 2022.

The question to ask here is how hospital administrators can decrease the cost of labor while improving reimbursement and delivering quality patient care? C-suite executives are tasked with very difficult operational and financial scenarios. Chief Financial Officers and other hospital administration leaders are looking for ways to solve these problems. I am confident that hospital leaders are already putting strategies to reduce costs to collect, reduce AR days, improve reimbursement while complying with government and payer guidelines.

As I am writing this blog post, I? recall an episode from the American medical drama television series “The Resident” where hospital administrators reduced the already shrank budget by 2 million dollars. I laughed while watching the episode telling myself that it wasn’t true or realistic but the current situation and news about hospitals getting closed convinced me otherwise.

I know no one asked but here are my two cents on how healthcare administrators can stop the financial leakage while improving overall revenue cycle management workflow and processes.

1. If you have implemented technologies in the RCM departments, re-visit them - ask yourself a question, do these technologies really help your RCM processes and your staff? If you need to hire more staff with the same patient volume the answer is no. There is only one job for machines - help humans by reducing manual and repetitive tasks, and help staff identifies what matters to the patients and hospitals.
2. If you haven’t implemented any process automation or computer-assisted technologies, rethink your strategy - talk with your revenue cycle management leaders and staff and ask them where they are spending their time the most, how you can help them automate most of their common and repetitive time-consuming tasks. How Computer-assisted CDI and Coding can increase productivity, efficiency, and accuracy while improving the bottom line.
3. Unemployment claims are low so you will be competing with your peer hospitals to hire the experienced staff to fill the position - instead, think about what you can outsource?? What will you save by outsourcing? Can the services provider scale with your business? Hiring, training, and/or retaining costs are generally way lower than outsourcing costs.
4. Implement robotic process automation (RPA) designed to specifically automate one task with higher accuracy, allowing your human resources to work on complex tasks instead of just doing boring data entry. As a leader of the facility or supervisor of the front-end or back-end operations department, you can find many different use cases to implement digital workers (bots). Before implementing full automation, define success metrics and do a pilot. Failed implementations can lower the morale of your team as well as cost your hospital time and money.

Also remember, Artificial intelligence (AI) and Automation (RPA) are here to stay but unlike the finance industry, the healthcare industry is not transaction/100% data-based. Healthcare is in the business of caring for the physical and mental injuries of humans. If someone says that they deliver 100% automation for RCM workflow and processes and/or provide autonomous medical coding software it’s a red flag. The current healthcare processes and workflows will always need human intervention, at least for the next few years.

References:

1. Beckers Hospital Review
2. Kaufman Hall

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