Blog

Healthcare in Crisis: Resource Constraints Add Mounting Pressure

By AGS Health

November 3, 2022

More than 130 rural hospitals have closed over the past decade; a record-breaking 20 shutting down in 2020. According to a report from the Center for Healthcare Quality and Payment Reform, an estimated 500+ rural hospitals are at immediate risk of closure due to financial losses. These closures are occurring because rural hospitals lose money delivering services to patients. Historically, many received grants, local tax revenues, or subsidies from other businesses that offset losses. Still, there is no guarantee that these funds will continue to be available or sufficient to cover the higher costs hospitals are experiencing. Short-term financial fixes won’t fix this long-term problem. Rural hospitals require adequate payments and a better payment system if they are to continue to provide essential health services to their communities. Until such measures are in place, healthcare executives are scrambling to contain revenue, optimize reimbursements, and prevent leakage so they can keep their doors open.

The Root of the Problem

Small rural hospitals don’t make large profits on patients with private insurance – money that could help to offset losses on uninsured patients and patients with Medicaid. It’s common for small rural hospitals to be paid less for services by private insurance plans than by Medicare or Medicaid. Losing money year after year, these hospitals can’t maintain the adequate capacity to respond to emergencies. Sadly, closures restrict access to timely care for millions across the U.S., and the ripple effect of these closures need to be understood and addressed. These hospitals serve many employed by our nation’s farm and ranch workers, and solar energy facilities, and they are the closest source of care for many national parks and recreation sites. The financial strength of healthcare organizations is essential for adequate care delivery.

And it’s not just small-town hospitals that are feeling financial pressures. The issue is widespread – hospitals of all sizes are struggling. What’s happening with rural hospitals is an early warning sign of a much larger problem – the financial stability of hospitals across the U.S.

One area healthcare executives seeking to contain revenue and combat growing financial challenges should consider is the revenue cycle. It’s one area that can yield significant improvement and savings. The right changes to revenue cycle operations can help healthcare organizations run lean.

The Need for Lean Healthcare

Healthcare was spared major disruption during the Great Recession (2007-2009), but the industry won’t be so lucky this time – as evidenced by closings, layoffs, and service reductions. While some economists believe healthcare is recession proof, there are warning signs that many healthcare executives are monitoring so they can mitigate risks.

Escalating operating expenses due to inflation, drug costs, and labor expenses has healthcare executives questioning how they can operate leaner. Lean healthcare embraces continuous improvement and minimizes waste in every process, procedure, and task. For revenue cycle management, there are opportunities to automate workflows and processes – eliminating human intervention, which helps to minimize risks, and reassigning those staff so they can focus on more complex cases or mission-critical work that will help maximize reimbursements and contain revenue. The need to automate tasks is supported by vacant positions, and reports indicate resignations and retirements among healthcare workers will continue. Additionally, as regulatory requirements and the need for documentation increase and coding becomes more complex with the rollout and implementation of ICD-11, the decision to use technology becomes simple. Technology advancements, including artificial intelligence, machine learning, computer-assisted coding, and CDI, have profoundly changed revenue cycle management. Smart technology ensures charts are coded, documentation is thorough, and reimbursements are timely and maximized – helping hospitals not only contain revenue but automate tasks so staff can be better utilized.

Healthcare in Crisis

Automation Allows for Focus

In recent months, there has been an influx of news about hospitals cutting services to address staffing challenges. The great resignation has hit healthcare hard – losing an estimated 20% of its workforce, including 30% of nurses. In 2022 alone, nearly 1.7 million healthcare workers resigned. Those who remain are experiencing burnout, which, if not addressed, will result in many leaving the profession altogether. In fact, a new survey shows up to 47% of U.S. healthcare workers plan to leave their positions by 2025. The impact these vacancies will have on the healthcare system as a whole and care delivery, in particular, is unfathomable.

Conclusion

How many more hospitals will close or reduce services because they can’t meet minimal revenue needs? Time will tell. What we do know is that for the healthcare industry to provide the highest quality care to patients across the U.S., it requires financial stability – for every healthcare organization. With healthcare constantly changing, technology offers a solution to the staffing problem. Applying lean principles to the revenue cycle is a wise first step because of the ability to immediately automate workflows and optimize how staff are used.

If you need help evaluating your revenue cycle, contact AGS today.

Favicon Image

AGS Health

Author

AGS Health is more than a revenue cycle management company–we’re a strategic partner for growth. By blending technologies, services, and expert support, AGS Health partners with leading healthcare organizations across the US to deliver tailored solutions that solve the unique needs and challenges of each provider’s revenue cycle operations. The company leverages the latest advancements in automation, process excellence, security, and problem-solving through the use of technology and analytics–all made possible with college-educated, trained RCM experts. AGS Health employs more than 10,000 team members globally and partners with more than 100 clients across a variety of care settings, specialties, and billing systems.

Related resources