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Ways Hospitals Can Handle Losses From Medicare


Hospitals across the United States, from extensive urban facilities down to small rural hospitals face a growing challenge over the next ten years. The problem is two-fold. Over the next decade, the remainder of the Baby Boom generation will become eligible for Medicare.

At the same time, the gap between the actual cost of care and reimbursement from Medicare is widening. According to the Medicare Payment Advisory Commission (MedPAC), about three-quarters of short-term acute care hospitals lost on Medicare patients in 2016. In fact, Medicare losses at some facilities were double what those same facilities lost in unpaid Medicaid patient treatment.

Experts say there are five areas hospitals need to examine to maintain the health of their own facility.

Cut Overhead.

First and foremost, cut overhead.

Many hospitals run their own IT departments, hire their own security, and handle all their finances in-house. Consider using a medical billing outsourcing company to oversee the management of your revenue cycle. Likewise, it might be cheaper to hire a company to provide security services for your facility.

Those companies assume the cost of employee benefits and equipment and spread the price for that over their entire clientele.

Examine Technological Need.

Secondly, whether your hospital is a single operation or part of a medical corporation with multiple facilities, having redundant equipment and technology can cost you money. Before purchases are made, consider bringing the critical players to the table to create a consensus on what and how much technology is actually necessary. This is even more important at smaller, rural facilities where duplications just because one clinician has a preference for a particular device can be cost prohibitive.

Look at Your Revenue Cycle.

Hospitals have an abundance of data at their fingertips—from patient information to cost of supplies. What experts suggest is focusing the analysis of your data into critical areas affecting the management of your revenue cycle. For example, knowing the average length of time that accounts spend in accounts receivable, or knowing what percentage of patients in your emergency room actually require emergency treatment rather than needing care for chronic conditions such as diabetes or high blood pressure.

Create Protocols.

Establish protocols for care. Experts say that creating blueprints for handling common, recurring conditions in patients can streamline the process. Variations in standard care from patient to patient have a detrimental effect on Medicare payments. Blueprinting can cut costs and also cut down on non-reimbursement from Medicare.

Establish Patient Care Procedures.

Finally, hospitals need to inspect what they expect. If your facility has established procedures that need to be followed for patient care, then someone needs to be involved in making sure those protocols are adhered to. Hold clinicians responsible for making sure blueprinting is followed.


All of these suggestions become infinitely more manageable with one more important ingredient: buy-in from employees. Involve your staff in the importance of all of these things. Get them on board so they understand that your hospital’s health depends on everyone doing what they can to provide the best care at the most affordable price—for the patient and the hospital.


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