3 Ways Healthcare Providers Can Prepare for a Recession
Unless you’re living under a rock — or don’t drive a car — you’ve most likely heard that the national average gas price has reached $4.67, the highest ever recorded. That’s up more than $1.50 per gallon since last year at this time.
The oil and gas industry isn’t the only one experiencing rising expenses, though. Healthcare provider organizations, from solo practices to large health systems, are dealing with higher overhead costs. Escalating expenditures on things such as medical equipment, office supplies, utilities, drug supply and personal protective equipment (PPE) are especially problematic because average overhead expenses eat up roughly 60 percent of a practice’s revenue.
Why the continued loss in revenue? There are a myriad of reasons, but one of the biggest is staffing costs, which is almost always the biggest expense in any medical practice.
With the current healthcare labor shortage, many provider organizations have employed traveling nurses or used contract labor firms, intensifying already high labor costs. Add to that rising inflation, reduced payer reimbursement, increased cost to collect and a bigger median subsidy per physician full-time equivalent, and you have a potentially financially unsustainable business.
All is not lost, though, especially if you prepare for a recession — or at least a months-long period of continued high inflation and mushrooming operational costs — by not only tracking expenses but also increasing revenue.
1. Reduce the Number of Missed Appointments
Boosting your revenue doesn’t have to be complicated. There are numerous ways to achieve it, from collecting more patient payments at the time of service to ensuring your front desk staff is trained well to check patient eligibility.
Something your practice should already be doing but could probably still improve upon is reducing patient cancellations and no-shows. These types of missed appointments cost practices thousands of dollars each year, negating probable revenue and markedly increasing attrition. However, medical groups actively working to minimize no-shows can reduce them by up to 70 percent.
What does “actively working to minimize” missed appointments consist of? Basically, it means reminding patients of their scheduled appointments through automated reminders and enabling them to use digital tools that make the check-in process easier.
Many consumers prefer contactless care options, anyway, because it lets them more easily and conveniently complete pre-registration, fill out intake forms and pay bills online. Digital technology also reduces the administrative burden on your practice staff.
2. Focus on Patient Retention
Once you procure new patients, it’s important to retain them. The probability of keeping a patient is much higher than acquiring one. Plus, it’s much more cost-effective. It costs a physician practice an average of five-to-eight times more to attract a new patient than to keep an existing one.
Improving your retention level can be accomplished by focusing on patient satisfaction. Make it easy for patients to communicate with you, whether that’s by automating registration, reducing the time they spend in your exam room or educating them on and promoting your online portal. If you don’t already, consider offering virtual care services, including telehealth.
By focusing on patient satisfaction and engagement, you build loyalty. Loyal patients are more likely to tell their friends and family about you, boosting your practice reputation and helping you maintain a steady patient volume.
A retention strategy shouldn’t only be for your patients, though. It’s essential that you are attuned to the needs of the physicians and other clinicians you employ, not only to reduce burnout but also to prevent high turnover. Turnover among primary care physicians costs a staggering $979 million annually.
3. Identify and Track Key KPIs
Perhaps a more quantitative method for dealing with the challenges of high overhead and uncertain revenue is strategically identifying and tracking key performance indicators (KPIs). As we mentioned in our most recent blog, KPIs enable physician practices and other provider organizations to analyze real-time data to provide insight into their clinical, operational and financial performance. Some key KPIs for healthcare practices are:
- Days in accounts receivable (A/R): The average length of time it takes for a submitted claim to be paid
- Clean claims ratio: The percentage of clean claims (or claims paid at first submission)
- Claims denial rate: The percentage of claims denied by payers during a given period
How Digital Technology Can Help
Facing an uncertain financial future can be frustrating for any medical group, but proactively taking steps to build and maintain a steady revenue flow can mitigate some of the challenges. Just as technology is utilized in many clinical areas of healthcare, it can be used to provide practices with the tools they need to better serve patients.
Our cloud-based, HIPAA-compliant patient engagement platform automates and integrates patient access to alleviate administrative bottlenecks, helping deliver a more consistent, tailored and satisfying patient experience across all touchpoints. Schedule a meeting with us to learn more!