- Demand for care, an aging population, and labor shortages are driving healthcare cost increases
- Healthcare leaders need sustainable strategies that contain costs while improving care
- Options to serve patients and control costs include providing financial education and retirement planning services, enhancing collection efficiencies, and leveraging group purchasing to lower prices
Healthcare leaders face a daunting set of challenges. As America’s population ages, older people are requiring more healthcare services. In the last U.S. Census in 2020, one in six people in the U.S. were 65 and over.[1] By 2034, the U.S. Census Bureau projects that people over 65 will outnumber those 18 and under.[2]
Higher demand for healthcare is also being accompanied by significantly rising costs. Hospital costs per patient have risen 23 percent since before the pandemic[3], largely due to worker shortages and inflation.
Ballooning healthcare costs threaten the quality of care delivered to patients and the financial viability of healthcare companies. Healthcare leaders are urgently called to modernize in order to control costs while still delivering high-quality, personalized care to patients.
Three Strategies to Contain Costs and Improve Patient Care
In this environment of rising costs, healthcare leaders must implement strategies that limit expenses while maintaining and enhancing the quality of care delivered to patients. Promising strategies include:
Worker-focused Investments
Addressing healthcare labor shortages, and the cost increases they drive, demands short and long-term strategies. In the near-term, healthcare organizations need to retain critical staff and should gear investments and decisions to promote job satisfaction.
One way to attract and keep talented workers is to actively support their financial wellness. Financial stress is an everyday reality for many American workers. Nearly 70 percent of American workers say that financial stress negatively impacts their mental health, and the average American worker spends about three hours each week worrying about their personal finances while at work. Besides, it takes a toll on workers, and three in four U.S. employers say employee financial stress negatively impacts their operations.
Healthcare companies may be able to play a meaningful role in easing the financial stress of their workers – support that workers will reward with increased loyalty. Employers may be able to enhance the financial wellness of their employees with:
- Financial education: Debt management, investing in stocks, bonds, and mutual funds, and establishing tangible financial goals can all seem overwhelming. Employees with access to online on-demand financial courses may demystify complex financial topics and gain confidence in their ability to save and invest.
- Student loan assistance: Student debt is the main source of many younger workers’ financial stress. Healthcare companies may help workers identify loan forgiveness options, refinance student loans, and better manage debt repayment.
- Retirement benefits: Planning, saving, and investing to meet retirement income needs is an understandable source of worker financial stress. By providing a range of retirement investment options and the tools and education needed to optimize their use, healthcare companies may help their workers establish and follow a retirement savings strategy.
Companies that take a proactive role in workers' financial well-being are more likely to retain employees. Nearly 80 percent of U.S. workers are more likely to stay with an employer that offers financial wellness benefits.
Enhance Operational Efficiency
Healthcare practices are in the business of improving patients' lives. While running an efficient business may not be in a company’s mission statement, it is what allows a practice to sustainably deliver high-quality care to patients.
Fortunately, there are several tools healthcare companies can leverage to improve efficiency, become more profitable, and serve patients. Efficient and cost-effective collections improve the cash flow and profitability of healthcare practices. For example, a substantial financial risk practices face is when revenue goes uncollected, and time and labor must be devoted to tracking it down.
Healthcare practices can work with a banking partner like PNC Bank to introduce electronic payment options and credit card processing. This allows practices to collect payments when services are delivered and provides patients with the option to pay for care using health savings account (HSA) and flexible savings account (FSA) credit and debit cards. Practices can also implement in-office check deposits that allow patients to pay for services with a check without requiring staff to leave the office and go to the bank. These and other steps may reduce accounts receivable and make funds available quickly.
Outsourcing receivables entirely to a banking partner has other benefits that can bolster revenues and profitability. For instance, practice staff can focus on high priority tasks that generate revenue and improve patient satisfaction. Outsourcing receivables can also reduce the risk of embezzlement because funds are processed outside of the office. In virtually all cases, a bank will process payments faster and cheaper, allowing a practice to focus on what it does best.
Negotiate Lower Prices
Healthcare providers will always need equipment and supplies to deliver care to their patients. But lowering the amount of money spent on essential supplies should be a top priority for healthcare leaders. This can be accomplished by banding together with other healthcare companies and leveraging collective buying power to lower costs on medications, services, and supplies.
For example, more than 1,000 private dental practices have joined Smile Source, which leverages the $100 million in collective purchases members make each year to negotiate discounts on equipment and dental supplies.[4]
Healthcare companies face an array of cost-driven headwinds. However, by making strategic investments in technology and employees, healthcare leaders may evolve their companies in more financially sustainable ways and improve patient health.
Our team of healthcare banking experts can support your cash flow management and assist in financial planning. We offer a range of financing products designed with the needs of healthcare in mind. To learn more, visit us online.
