- In this period of healthcare reform, numerous organizations continue to change their business practices so they can obtain more hospital profitability while also delivering quality care. Healthcare expenditures are expected to reach $4.4 trillion by 2018, and this high level of spending activity has hospitals currently under a lot of pressure to reduce costs.
RevCycleIntelligence.com breaks down five different ways that hospitals can improve their profitability. Hospitals can specifically enhance profits by boosting patient satisfaction, reducing readmissions rates and unnecessary testing, understanding revenue cycle performance and investing in effective technologies.
Boost patient satisfaction by providing quality customer service
If patients are satisfied throughout all aspects of their healthcare experience, then they are likely to turn to the hospital that provided them with exceptional care again in the future. Additionally, higher hospital margins are typically distinguished by higher patient satisfaction, according to a previous report. American hospitals that gave a superior patient experience gained net margins that were 50 percent higher, on average, compared to those that provided an average customer experience, the report noted.
When a patient feels satisfied with his office interaction, he is likely to have a positive perception of the entire healthcare facility. When a patient is unhappy with his service, he is likely to complain and have a negative perception a facility, which can cause staff to spend more time on trying to resolve conflicts.
High readmission rates can be costly to a hospital. Consequently, it’s in a hospital’s best interest to try to reduce the number of readmissions. Also, hospitals that don’t have high readmission rates most likely won’t get penalized by Centers for Medicaid and Medicare Services.
“Research studies and quality-reporting initiatives around the country show that 15-25 percent of people who are discharged from the hospital will be readmitted to the hospital within 30 days or less, and that many of these readmissions are preventable,” according to the Center for Healthcare Quality & Payment Reform.
The center recommends that hospitals reduce readmissions through data-driven changes across the full continuum of care. They can do this by obtaining data on patients and analyzing that data.
Hospitals can also help prevent readmissions by providing effective follow-up care and implementing care management. By taking these actions, readmissions reduce. As a result, costs associated with high readmissions rates are likely to reduce.
Also, many providers are using telehealth technology as way to help hospitals’ readmission reduction programs handle high readmission rates.
Reduce unnecessary testing
Hospital profits are likely to increase if facilities reduce the amount of unnecessary tests they administer. In the US, redundant testing alone has been estimated to waste up to $5 billion each year, a previous report noted.
In 2014, nearly 3 in 4 physicians said unnecessary tests and procedures represented a serious problem in the healthcare system, a study from choosingwisely.org said. This study pointed out that providers can reduce unnecessary testing in some cases by spending more time talking to patients about their health needs. At times, some patients actually ask physicians to administer tests on them that they don’t need. Additionally, if a physicians has not obtained enough information on a patient, he or she may believe the patient needs a test that is not necessary. Improved communication between patients and physicians can lead to a reduction in unnecessary tests.
Additionally, unnecessary tests can be reduced when hospitals implement an effective laboratory expert system. According to a precious report, a branch of the Veterans Health Administration saved more than $150,000 per year for the two years after implementing a laboratory expert system that helped reduce test volume by about 11 percent.
Understand revenue cycle performance
Hospitals need to understand their revenue cycles so they can identify opportunities and weaknesses. If hospital executives have a clear understanding of their organization’s revenue cycle, then they can determine where to allocate funds and resources.
It’s also vital for providers to also identify bottlenecks in operations. One way a hospital can understand its revenue cycle performance and identify bottlenecks is through analytics. Revenue cycle analytics and using financial data can help make a revenue cycle more visible through graphs or charts. Hospitals should use dashboards and robust reporting to optimize revenue cycle management, a previous report said.
“From a provider’s point of view, it begins with dashboards for reporting and key performance indicators to monitor the transactions for payment denials and revenue management,” Chad Sandefur, Director and Healthcare Analyst at AArete, said previously. “More importantly, using the analytics to internally see whether our staff is focused on the things that they should focus on. Ultimately, you can’t manage what you don’t measure.”
Invest in health IT systems to monitor utilization
Another way hospitals can improve profits and run efficiently is by using effective technologies. In some cases, hospitals are using clinical decision support systems to achieve positive financial outcomes. These systems allow providers to oversee laboratory utilization. In many cases, providers are able to use these systems as a way to significantly decrease the number of unnecessary tests without affecting patient care quality, a previous report said.
Also, if providers use these systems effectively, they can reduce the amount of errors they make during the prescription placement phase of healthcare. When hospitals are able to avoid making prescription placement errors, less money is spent on reordering the correct prescriptions. These systems can also help providers avoid making common mistakes that can lead to high-cost prescribing behaviors.