In today’s world, it seems that everything comes with a higher price tag. From a cup of coffee to a gallon of gas, prices have been steadily increasing — and the healthcare industry is not immune to these soaring expenses.
The skyrocketing cost of care puts immense pressure on hospitals and healthcare providers. As expenses surge — from medication costs, to advanced medical technology, and personnel salaries — hospital leaders and providers are challenged with maintaining high-quality care while navigating financial constraints. This strain can translate to heightened pressure to see more patients, streamline services, and implement cost-cutting measures.
Reasons for Rising Costs of Healthcare
The COVID-19 pandemic is partially to blame for hospitals’ financial woes. In a report from April 2023, the American Hospital Association (AHA) wrote, “After three years of unprecedented challenges and caring for millions of patients, including over 6 million COVID-19 patients, America’s hospitals and health systems are facing a new existential challenge — sustained and significant increases in the costs required to care for patients and communities putting their financial stability at risk.”
But administrative and clinical expenses were rising even before the pandemic — a study published in the Journal of General Internal Medicine found that these expenses increased consistently approximately 4% each year from 2016 to 2019. A report from April 2019 stated that, at the time of the report, the United States spent $1.1 trillion on healthcare administration, with $504 billion of that in excess.
Clearly, the cost of caring has been rising for several years. So, in today’s economic conditions, what are some of the main financial stressors for hospitals and reasons for rising costs of healthcare?
- Recruitment and retention are expensive. A dedicated workforce is the backbone of any healthcare organization. But, according to data from Press Ganey, 1 in 5 employees left the industry in 2023 — and 1 in 4 among those had been at their organization for less than two years.
Retention is expensive. Competitive salaries, exceptional benefits, and training expenses can put a strain on already tight financial resources. But recruiting new personnel is even more expensive. Research shows that the recruitment cost per nurse vacancy can range anywhere between $10,000 and $88,000. The cost of physician recruitment is even higher, ranging from $88,000 to $1 million per physician. - Administrative tasks strain financial resources. A significant portion of the rising hospital costs can be attributed to administrative costs in healthcare. Navigating insurance claims, billing procedures, appointment scheduling, and regulatory requirements require substantial administrative resources.
- The cost of noncompliance in healthcare poses financial risk. Complying with stringent regulatory requirements is non-negotiable for hospitals. Failure to adhere to regulations governing patient safety and data privacy can result in hefty fines, legal penalties, and damage to the hospital’s reputation. Consequently, hospitals must dedicate resources — such as staff training and regulatory audits — to ensure compliance. Doing so is expensive.
- Technological advancements come with a hefty price tag. Hospitals must continually invest in advanced technologies and state-of-the-art medical equipment designed to enhance capabilities, revolutionize patient care, improve outcomes, and streamline processes. These investments are important for delivering high-quality care, but they add to the overall cost burden.
- Inflation has raised the prices for essential supplies. A 2023 report from KPMG states that a “closer examination of hospital margins indicates supply expenses as the second highest cost to hospital operations.” Manufacturing costs, packaging costs, and shipping costs are more expensive these days — translating to higher costs for hospitals.
Combat Rising Hospital Costs by Partnering With a Revenue Cycle Vendor
Inflationary pressures and current economic conditions are now forcing hospitals and healthcare organizations to take a closer look at their budgets and find innovative ways to contain costs and deal with the rising cost of care in healthcare. As a revenue cycle leader, you likely face pressure from the top to optimize the revenue cycle to ensure financial stability. Your team plays an important role in maximizing revenue generation, minimizing lost revenue, and improving the hospital’s overall financial performance.
Partnering with a vendor that specializes in revenue cycle and complex claims management can be advantageous for hospital revenue cycle teams that are tasked with combating rising hospital costs. Vendors offer expertise, technology solutions, and resources that can help streamline processes, maximize revenue potential, recover lost revenue, and improve financial performance.
How EnableComp Can Help
At EnableComp, we don’t like to think of ourselves as just a vendor — instead, we’re your “department down the hall.” We offer the resources and infrastructure needed to help your hospital maximize its revenue potential and financial performance.
We understand that one of the main pressures that you and your team face is the need to adapt to changing reimbursement models and regulatory requirements. With ever-changing healthcare policies and reimbursement structures, your team must be able to navigate complex billing and coding guidelines to ensure accurate claims submission and reimbursement. Failure to comply can result in denied claims, loss of revenue, and even potential legal repercussions, all of which can add to the already mounting financial pressure.
When you partner with us, you benefit from our decades of specialty revenue cycle management expertise. We know how challenging complex claims like Veterans administration, workers’ compensation, motor vehicle accidents, out-of-state Medicaid, and denial management can be. Without the right resources, your team is stuck with underpaid and aged claims, and denials and delays. Our team can help you improve account management, minimize delays and denials, and maximize revenue and yield. In fact, EnableComp clients see an average 3:1 ROI when they partner with us for their specialty RCM management.
One of the key advantages of partnering with EnableComp is access to our intelligent automation platform, E360 RCM™. Our platform helps us electronically file claims at a rate 7 times faster than the industry average, meaning you get higher reimbursements with fewer delays. Our technology solution can automate time-consuming and tedious tasks, such as claims processing and denial management, and reduce the risk of manual errors.
Partnering with EnableComp can also help decrease days to pay. We can identify inefficiencies in revenue cycle operations and help accelerate cash flow — every hospital’s goal. By reducing the time between the care delivery and payment receipt, hospitals can improve financial stability.
To learn more about how EnableComp can help your revenue cycle team combat rising hospital costs and maximize revenue potential, contact us to schedule a free consultation.
