The health care system is more complex than most people know. Its business model is different from most businesses in that its consumers don't usually come willingly. That, plus not getting paid what they bill, hurts cash flow and makes health care a shaky business. With uncertain revenue, costs not entirely within their control, and regulatory issues, health care management problems aren't always easy to fix.
Defining Revenue
It's hard for health care entities to consistently define their revenue. Most businesses can set a sales goal and then send its people out to try to reach that goal. In health care, the revenue goals depend on the health and well being of the populace in general. Some hospitals market services that they hope physicians will use if their patients need those services. But in markets where there is more than one hospital, physicians usually only have privileges at one hospital, which means their patients will be going to the hospitals where they have those privileges.
Health care entities also don't get paid what they charge. Every insurer gets a discount, and these days even self pay patients get discounts off their bills. This means that just marking up bills won't affect cash all that much, but can give hospitals a false impression of how profitable they may or may not be.
Controlling Costs
Health care organizations have worked for years to try to contain their costs. There are only so many costs they can contain, though. State regulations mandate how many of certain types of staff must be on hand for certain medical procedures or medical care, including the requirement for individual physician offices to have nurses if they treat patients of the opposite sex. It also regulates how many hours some of this staff is allowed to work consecutively.
Some procedures are only allowed in specific areas also, which means those areas must be maintained even if they're not used all that often. And, because many management personnel are trained only in their particular area of expertise, they are less than efficient when it comes to understanding budget and contain costs within their own departments.
Training and Certification
Trained professionals must prove they're maintaining continuous education, and that comes at a cost to medical facilities. Certified professionals are mandated to study a certain number of hours per year to keep those certifications up to date for many fields of medicine, at many levels. Within hospitals, there are also mandated types of training, such as that provided by the Occupational Health And Safety Administration. It is also crucial to maintain certifications of quality standards such as from the Joint Commission.
Leadership
In medical facilities, there's usually one leadership position in each specialty. Most of the time, the person promoted into management has technical skills, but not leadership skills. Because of shortage of staff, scheduling issues and monetary considerations, leadership training isn't a high priority for these organizations. Therefore, there's a lack of true leadership and good management, which means many staff have to rely on learned skills rather than good direction.
Charity Care
Hospitals are mandated to provide charity care to those patients who fall within certain financial income levels. Many physicians give charity care also. Hospitals in low income levels end up giving away more care than other hospitals, which puts them in a tough financial position. States reimburse hospitals a percentage of the charity care they give, but it doesn't come close to covering the costs of free care when measured against a facility's overall budget.
Tags: health care, which means, care entities, charity care, health care