Category Archives: Healthcare Finance

Does your health care provider have the cash to survive today?

Survival of the fittest!

It is very well know that in today’s healthcare business, cash flow is the life blood of any business, specifically in the healthcare industry.

The healthcare industry has become much more competitive over the years. Hospitals proclaiming that they have a state of the art cardiology center, with nurses that put the patient first. I am sure that hospitals across the country put their patients first, it’s just that they do it better, the ad claims.

We see the messages on billboards lining the streets, on TV. from shows like Big Medicine and such. Walk thru a mall and see the ad’s from doctors who are specialist in plastic surgery, weight control, and various other procedures.

One would ask why a doctor, hospital does, emergency service need to advertise, don’t they receive their patients from word of mouth, one doctor recommending another?

One would think so, but the game has changed for ever. In the near future the family doctor will no longer be. We will all be seeing a“specialist” for what ill’s us. You may ask yourself “so what’s wrong with that?” well there is nothing wrong, but if you work in the healthcare industry and run a practice, hospital, emergency care center and such, well you need to make sure that your business has steady cash flow and has a competitive edge, and in today’s world the edge is CASH!

Medicaid and Medicare set the stage for what will be paid on claims. As we know, HMO’s and PPO’s and other insurers follow suit and try to under pay claims as well. You the healthcare provider are providing services on a daily basis and do not receive payment on the claim for 45 to 90 plus days, and that is if it is coded correctly.

The point that I am trying to make is that there is much more competition for each dollar that is out there and a lot of energy is spent to collect that dollar. Separating yourself from you competition is important. Having the steady cash flow for working capital to grow is imperative!

The number one key factor in a provider’s fiscal downfall, or lack of growth, is the lack of working capital. A solution to prevent this lies in the provider’s accounts receivable, an asset often wasting away accumulating dust on the balance sheet that becomes lost revenue due to the time value of money.

Many “C-Suite” healthcare executives are choosing medical accounts receivable (MAR) funding as an important tool in their business financing strategies. MAR funding’s flexibility and immediate cash infusion reduces their dependency on debt-incurring bank loans and lines of credit as their sole forms of financing. It provides a predictable and steady cash stream and the amount of medical accounts receivable funding is not limited by a bank’s often under-valued assessment of the provider’s assets

Bank credit lines are often insufficient to meet a provider’s working capital needs and monthly cash flow plans, especially when a conventional bank determines a line based on a significantly “under-valued” valuation of the provider’s assets. Additionally, the bank may be quick to disqualify that collateral once the aging reaches 90 days. This often happens because most conventional banks do not have the deep understanding and working knowledge of the healthcare business, its industry specific regulatory requirements and cash flow challenges.

I challenge you to take a look and see if your business can survive?
How “fit” is your business?
Who are your competitors?
Do you have cash on hand to handle the ups and downs or to expand your business, to be competitive?

Editor’s Note
: James Hill is the author of this article and, Vice President at Choice Med Consulting. You can check out his profile on linkedin

Strategies for growing hospital volume

Volume trends in US healthcare – Shift from hospital to non-hospital settings

Over the past five years, hospital inpatient and outpatient admissions are growing at a much smaller rate than non-hospital based outpatient services. A clear case in the point being outpatient surgeries. Increasingly, outpatient surgeries are moving to non-hospital based settings, taking with them the observation, follow-up and possibly some Med surg volumes (see below)


Competition for Market share

The current payment system is also fuelling this trend, as it gives non-hospital providers an advantage in that they are able to focus on most profitable services (such as opthamalogy). While, hospitals face a higher cost structure to support unprofitable but essential services (such as inpatient psychiatric units). In metro areas like Houston, for instance small, ful service facilities are springing up as a result of joint ventures between physicians and Wall street based venture capital funds.

This means now more than ever, traditional hospitals need to have strategies in place to fight for market share with these free standing centers.

5 Strategies for maintaining and growing volume

1. Increase outpatient services capabilities to compete on equal footing with freestanding ASCs

2. Consolidate core programs to better withstand market competition – Build strong programs in profitable areas such as thoracic surgery, ENT and Oncology

3. Integrate physicians into strategic planning, management and governance – A close analysis of the freestanding ASC type centers reveals over 60% of these facilities are developed by physicians or physicians in conjunction with another entity.

4. Build in Quality and increase it’s visibility – Do what Toyota did in the auto industry. Drive process and quality improvement and build your hospital brand around these initiatives and outcomes (Eg: Lowest infection rates in the city).

5. Invest in and utilize Business intelligence – To stay ahead of the curve you need to know, where you are in relation to your competition so continuously and rigorously measure and feedback business intelligence to your managers and administrators