McDonald Hopkins Law Firm Alert: Hospital Management During Tough Times -- Six Prescriptions For Financial Health

CLEVELAND, June 21 /PRNewswire/ -- Hospital managers find themselves challenged at every turn. Their institutions are experiencing a variety of financial, regulatory, and reimbursement-related challenges that, coupled with credit market issues, are putting increased pressures on their operations. Significant concerns about the ever decreasing access to capital and the increased costs of available capital, higher administration costs, significant increases in uncompensated care and declining reimbursements from payers have placed significant strain on the health care market as a whole. Add to those issues the uncertainty surrounding the impact of health care reform. With funding reserves and investment values decreasing, hospitals across the country are searching for creative ways to cut costs and restructure their businesses, including delaying expansion projects and facility renovations, foregoing technological and software updates or even cutting staffing levels.

Placing expansion or renovation plans on hold or cutting staffing levels can address these challenges only to a point, beyond which patient care issues arise. Similarly, improving reimbursement rates and reducing the number and amount of uncompensated claims have limited impact on immediate financial challenges. There are other options that should be reviewed, which if properly employed, may help shore up the hospital's financial health and permit it to weather some of the financial risks that are outside the hospital's direct control.

1. It is critical that hospital managers understand the current business environment. The challenges hospitals are facing—operational and/or financial—are likely not unique to them and may be worse for the lenders, equipment lessors, software licensors, suppliers and service providers with which they do business. Financial difficulties experienced by any of these entities have the potential to jeopardize the ability of a hospital to continue operating its business in an ordinary fashion, which, in turn, can impact its ability to continue meeting its obligations. For example, the sudden shutdown of a critical supplier could leave the hospital without critical supplies and unable, as a result, to operate in the ordinary course.

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McDonald Hopkins Alert: Hospital Management During Tough Times -- Six Prescriptions For Financial Health

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