What You Need to Know About Hospital Finance

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Hospital room filled with empty hospital beds.When you’re pursuing an online Master’s in Business Management with a focus on healthcare, you’ll find yourself learning more about finance and financial trends in healthcare. Understanding the financial side of healthcare is essential if you plan to have a career in healthcare management. Here’s a look at some of the current hospital finance trends to understand in 2016.

Prescription Drug Prices are Rising

For many hospitals, increases in spending on prescription drugs have quickly become a troubling trend. Prescription drug prices continue to rise, jumping more than 12% within the past year, according to Becker’s Hospital Review. Medications are already a huge percentage of overall health spending, and this percentage is expected to grow in the coming years.

As both generic and specialty pharmaceutical drugs continue to rise in price, these increases will continue presenting major financial challenges to hospitals in 2016 and beyond. Many hospitals are focusing on driving market competition this year, encouraging the FDA Commissioner to make the market access and speed of new drug approvals a priority.

A Shift to Value-Based Care

Hospitals and other medical facilities are seeing a shift to value-based care instead of volume-based care, and it’s important to understand this shift and how to take measures to ensure your hospital remains financially viable. This involves understanding clinical measures, getting a handle on how much it will cost to achieve each unit of healthcare quality and the outcome. New cost systems may need to be developed to show the cost for all medical activities throughout the hospital.

Population Health Becomes a Top Priority

Healthcare finance leaders are finding that population health, the study of health outcomes of certain groups of individuals (based on factors such as their upbringing and environmental influences), has become a top priority. Hospitals are beginning to lead the way in this area by moving away from the traditional model of treating individuals and providing only personalized care and toward the model of focusing on community health initiatives and larger-scale problems. Many healthcare organizations, in an effort to reduce costs and improve quality of care, have recently shifted to exploring the improvement of outcomes through a focus on patient populations. According to the American Hospital Association’s 2012 report, “Managing Population Health: The Role of the Hospital,”  “Hospitals and health systems of varying size, patient demographics, and geographic regions have begun to recognize that the main mechanisms to advance population health—improving quality and patient safety, increasing care coordination, and expanding preventive services—are the outcomes of initiatives they are already pursuing.”

Healthcare spending is only expected to increase in the coming years, and hospitals need to find ways to contain increases, being vigilant about costs. By understanding current financial trends, hospitals can take leadership roles that help contain costs, improve care, and increase revenue. If you want to learn more about this subject, view this recent infographic created by the George Washington University.

Sources

http://www.hpoe.org/resources/hpoehretaha-guides/805
http://www.beckershospitalreview.com/finance/3-costly-healthcare-megatrends-to-watch-in-2016.html
https://healthcaremba.gwu.edu