Factors To Assess The Sustainability Of A Hospital Essay Paper
Factors To Assess The Sustainability Of A Hospital Essay Paper
There are approximately 4,500 medical-surgical hospitals in the country. Of these, nearly 2,500 are affiliated with or a part of system, nearly 2,000 are independent, and approximately 200 to 250 are physician-owned hospitals.Factors To Assess The Sustainability Of A Hospital Essay Paper
Over the last ten years, there have been approximately 70 hospital bankruptcies. This includes approximately 46 from 2000 to 2006 and approximately another 25 to 30 over the last four years. Factors To Assess The Sustainability Of A Hospital Essay Paper
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For a great overview of issues impacting hospital viability, see an article titled “Factors Associated with Hospital Bankruptcies: A Political and Economic Framework” by Amy Yarbrough Landry & Robert J. Landry published in theJournal of Healthcare Management in July/August 2009. The article stated, for example:Factors To Assess The Sustainability Of A Hospital Essay Paper
“Bankrupt hospitals are smaller than their competitors. They are also less likely to belong to a system and more likely to be investor owned. Factors associated with filing organizations are placed into a political and economic framework derived from Park’s work on municipal bankruptcy filings. Common nonfinancial factors associate with hospital bankruptcies include mismanagement, increased competition, and reimbursement changes.”Factors To Assess The Sustainability Of A Hospital Essay Paper
The hospitals that tend to go bankrupt are generally independent, smaller and generally not rural. However, there are several hospital systems that have filed for bankruptcy and there are a significant number of rural hospitals that have filed for bankruptcy as well. For example, three-hospital Forum Health, based in Youngstown, Ohio, filed for bankruptcy in March 2009. Community Health Systems has since moved to acquire the system, beating out competitor Ardent Health with a $120 million bid. Factors To Assess The Sustainability Of A Hospital Essay Paper
A few of the key factors that drive bankruptcy include poor management, some large change in information and/or billing systems, a legal investigation, a large quality problem early on in the hospitals’ inception and certain other issues. Smaller hospitals with less cash on hand and smaller operating margins have less flexibility to pursue diversification and can have a much harder time withstanding these kinds of challenges than larger affiliated hospitals.Factors To Assess The Sustainability Of A Hospital Essay Paper
7 factors
The following provides a brief analysis of seven factors that can drive a hospital towards bankruptcy. Factors To Assess The Sustainability Of A Hospital Essay Paper
1. Geography. The greater moat and protective barrier a hospital has from other competition, the better chance it has of surviving. The more that a hospital is one of several choices for patients and physicians, the more susceptible it can be to bankruptcy. Hospitals in areas with low levels of competition for both patients and medical staff are less susceptible to bankruptcy than hospitals in more competitive markets. Factors To Assess The Sustainability Of A Hospital Essay Paper
2. Physical plant. To remain competitive, hospitals with aging physical plants must weigh the costs of a renovation with the increased business a renovation may bring. Because of the large amount of debt typically taken on by hospital for such renovations, a hospital that does not have to make significant changes in its physical plant or undergo significant physical renovation has a better chance of being able to sustain significant challenges and changes.
3. Physician alignment. Physicians are directly responsible for patient referrals to hospitals, and as such, hospitals with strong physician alignment — through employment, co-management or other relationships — are most likely to maintain or increase patient volume. If a hospital is poorly aligned with its physicians, and the market lacks a great deal of independent physicians to align with, the hospital is much more susceptible to bankruptcy. Factors To Assess The Sustainability Of A Hospital Essay Paper
4. Payor reimbursement. There is almost no substitute for being in at least a reasonable reimbursement market. In a very challenging reimbursement market, no matter how strong management is, it can be very hard to thrive. Markets with a single dominant commercial payor can be particularly difficult. With increasing pressures on government-run health program reimbursements, the value of strong private-payor contracts to maintain margins will only increase. Factors To Assess The Sustainability Of A Hospital Essay Paper
5. Cost structure. Hospitals with a high cost structure either due to high debt, high employee costs or the inability to amortize costs over larger revenues are more susceptible to bankruptcy. High employee costs may include wages and benefits, including pension plans, which have been particularly hard-hit by investment losses brought on by the recent economic decline. Further, hospitals that are unable to make labor and cost changes or undertake changes in the total number of employees are also much more susceptible to bankruptcy. Factors To Assess The Sustainability Of A Hospital Essay Paper
6. Management. There is very little that is as important as finding a great CEO and leadership of a hospital. If there is one place to over invest in, it is leadership. A leader must be able to block and tackle plus be a business and marketing guru and generate cases and business for the hospital. It is a multi-faceted job that requires great talent. Factors To Assess The Sustainability Of A Hospital Essay Paper
7. Quality. Quality can cause bankruptcies if either a hospital develops an ongoing reputation for being a low quality provider or if a hospital has substantial quality debacles early on in its history. Early deaths in a facility can be a problem that a hospital can never recover from. Also, a hospitals’ ongoing reputation as a low quality institution can make it very hard to attract patients or physicians.Factors To Assess The Sustainability Of A Hospital Essay Paper
These seven issues taken together can explain nearly any hospital bankruptcy. Conversely, small independent hospitals that maintain financial success typically experience challenges in only a few or none of these seven areas. For a great paper on this topic, see “The New Community Hospital Imperative” by Kurt Salmon Associates. The Kurt Salmon report states:Factors To Assess The Sustainability Of A Hospital Essay Paper