1. Intercept Inpatient Outmigration
Far too many small community hospitals have been losing money for far too long and are so financially fragile that they are on the edge of going out of business. Revenue continues to decline and operating expenses keep increasing. It’s not getting better by the way. The universal belief is that these hospitals cannot be successful because of small populations, declining insurance payments, uninsured patients, and because they believe physicians do not want to practice in small rural communities. Feel like the odds are stacked against you?
The reality is more encouraging. Most small rural hospitals are giving away a minimum of $1,000,000, and often more, of net annual revenue. I say, “giving away” because this revenue represents patients being treated in the local Emergency Department (ED) that need to be admitted as inpatients for further treatment. 60% of transferred patients could be treated safely in a local setting but are unnecessarily being transferred to larger, urban hospitals. An analogy would be an employed mechanic that is paid by the hour and is willing to change the oil or replace the battery, but is not willing to perform more time-consuming (but financially attractive and rewarding) repair work. The mechanic changes the oil but tells the customer to go down the street for other repairs. In a similar way, your hospital sends its revenue away. Someone will still provide the service and ultimately collect the revenue. It’s your choice whether you are increasing your market share or the hospital down the road.
2. Improve Customer Service
Small hospitals often advertise “great care, close to home”. If you ask the residents if they support the local hospital they will tell you, “Yes, I support the hospital. We need this hospital.” This sounds good, and makes people feel good. But your customers won’t “shop” with you if this is not true. The local hospital may believe the public supports the hospital. The hospital CEO may think the local folks should feel obligated to support the local hospital. But unless, or until, you treat your customers better than the hospital in the next town, they will continue to shop in the next town. This should not be surprising when one learns that most local hospital’s market share is 15% to 20% of the local market. That is the reality of how residents really feel.
3. Improve Registration and Billing Accuracy
60% of rural patient care services are under-billed. 20%+ of patient care is uninsured and you collect nothing. Your registration desk is your “cash register”; and your registration employee is your credit manager. This job is as important as the medical care you provide. You can go out of business as easily by not managing billing and collections as providing poor medical care. Why not pay the registration employee as much as you pay your doctor? The registration employee may be able to contribute more revenue than a doctor costs you, and may be more valuable.
4. Go “Out-of-Network” For Most of Your Commercial Insurance
You probably participate in (contract with) all commercial/managed care insurance plans because you think patients won’t use your hospital if you are “out-of-network”. Here’s one fact and one myth. The fact: you are too small to negotiate. You take what is offered. The myth: that initially your patients will use your hospital. Initially, they won’t. When they learn that they pay no more out-of-pocket than if you are “in-network” they won’t care. When patients learn that on most occasions they will pay nothing (no out-of-pocket), they will love you. You will collect 2 to 3 times more out-of-network than in-network. Where there is a contract, you lose. Where there is no contract, you and your customers win. You dictate the terms, not the insurance company.
5. Improve Operational Performance
Appropriate inpatient admissions are the greatest source of profit improvement. Performance Improvement (PI) is the second greatest source of profit improvement. PI is not an organizational unit, nor a regulatory requirement. It is the way you can increase profit without increasing reimbursement or patient volume.
Jim Burnette is the Founder and CEO of HospitalMD. Jim has worked in healthcare for more than 20 years. His mission is to strengthen Small Community Hospitals across the nation and help them thrive in today’s rapidly changing healthcare climate. Jim is a graduate of Georgia Tech and resides in Peachtree City, a small community right outside Atlanta, GA. Contact Jim at insight@hospitalmd.com,
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