Hospitals have an access to capital problem

The last year was tough on hospitals and health systems, and executives are planning for a challenging 2023 as well.

"We are looking now at two to three years of diminished margins, and when an organization suffers from a margin standpoint, one of the areas that's impacted is your access to capital," said Matthew Primack, president at Advocate Condell Medical Center in Libertyville, Ill., during an interview for the Becker's Healthcare Podcast. "Whether it's capital equipment, whether it's facility management or expansion, or other projects, that's become a pretty serious issue for us as we have a large enterprise that just naturally requires pretty regular infusion of capital support."

Mr. Primack said his team is figuring out how to get more creative to find alternative ways to address the capital deficit despite still having a strong financial position. One solution is transitioning more to virtual care.

Health systems are increasingly adding a virtual component to develop a hybrid model of care so patients can connect with clinicians remotely when possible and have in-person visits when necessary. Hospital-at-home programs are also becoming more common across the U.S.

"You don't necessarily need all of the bricks and mortar and equipment that goes into setting up a lot of practices and mid to large size box facilities [with a virtual model] and so knowing there are some capital constraints coming up in the near future, that's accelerated," said Mr. Primack.

Growth is also a touchy subject for hospitals and health systems as organizations report negative margins. Last year was the worst year financially for health systems since the pandemic began, according to Kaufman Hall, but leaders are still under pressure to undertake aggressive growth plans to expand access to care and better serve patients.

"What makes me nervous is how aggressive we can get on the cost reduction side at the same time really growing at exponential rates that we may not have seen in the years past from a market share standpoint," said Mr. Primack. "That's what makes me nervous, but at the same time, I'm optimistic and excited about what 2023 is going to bring."

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