Challenging Times for Modern Hospitals Require New Solutions

Posted by Ellen Dennis on October 1, 2013

I recently attended a Chief Nursing Officer conference that described the very challenging times that are ahead for modern hospitals. There are several key factors that are occurring over the remainder of the decade:

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1. Medicare/Medicaid — Between future changes/reductions and the ACCA penalties, there will be continued downward pressure on reimbursement.

2. Aging of the population — The demographic shift of baby boomers retiring has a twofold effect on hospitals. First of all, they will move from a commercial insurance plan to Medicare. So, the higher reimbursement level of the commercial payor will be lost. Secondly, the pool of patients in the marginally profitable/unprofitable Medicare plans will expand, further impacting overall margins.

If hospitals do nothing to respond to this shift, this effect alone will turn a profitable hospital to an unprofitable hospital before the end of the decade, as 8-10,000 baby boomers are retiring daily.

3. Consumerism — When individuals were asked the number one criteria that they used to make healthcare decisions, the answer was price. Lower hospital pricing, combined with transparency, will allow consumers to reduce costs by comparison shopping. Consumers, driven by high-deductible plans, will drive down hospital revenue.

4. Corporate benefit changes — Last year, GE dramatically changed the amount of healthcare spending for their employees and retirees. In one year, they cut their healthcare spend from $3 billion to $2 billion---with the reduction of $1 billion coming primarily from hospital care.

5. New entrants — Retail powerhouses, like Walgreen's and Wal-Mart will continue to expand more aggressively into healthcare, taking patients with them. Wal-Mart is looking at a nationwide network of provider hospitals to lower costs and improve access.

India, which has no government reimbursed healthcare, has learned to thrive while pricing their services affordably for the patient population. Indian providers are looking to expand to the United States, where their cost structure will allow them to be very profitable at Medicare reimbursement rates.
So, hospitals must find the lowest cost/highest quality patient care possible. The consensus belief is that hospitals will have to reduce their cost base by 20+% over the next decade—a very large decrease.

So, what should hospitals do in order to lower costs without sacrificing quality? We can help you lower your costs while improving patient safety and quality. The key is fine-tuning your staff mix.

We record the entire process of caregivers' interactions with the patients— from when the request was initiated, to whom performed the task, and how long the task took to complete. Therefore, we understand the current staffing mix and levels.

Armed with this data about care tasks and who performed them, we can help hospitals change their staffing mix to better fit their true patient care requirements. Our models demonstrate that a new staffing mix can help to lower total staffing expense by 7-12%. We have discussed this with hospital systems who think that our models have understated the benefit, which they believe to be much higher. It's great for your staff, too, since they get to focus on the tasks for which they were trained and hired.

The Amplion solution provides a tremendous financial benefit, combined with an improved patient experience and improved patient satisfaction. We think it's a great win for your patients, your staff, and your institution.

Please contact us if you'd like to talk about the possibilities.

close communication and care loops

Frank Grant

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