The financial markets are spinning. The world economy is faltering. The U.S. government is making a $700 billion or more bailout to avert a worldwide disaster. In this time of global financial crises, all hospitals and healthcare organization face an alarming financial scenario. Factors that accompanied the financial crises are decreasing revenues, increasing costs, and high consumer expectations (McNichol & Lav, 2008).
Many Americans has been laid off or facing mortgage foreclosures. With job loss comes loss of health insurance, thus hospitals are now caring for more uninsured patients. On the other hand, reimbursement has decreased for many patient conditions (Boyd, 2008).
According to Parry & Humprey (2009), the economic turmoil caused hospitals and healthcare systems to lose millions of their investment dollars, affecting their financial safety net. Losing the organization’s safety net present a complex challenge for Chief Executive Officers (CEOs), physicians, nurse executives, administrators, financial advisors and department managers who must not only lead in today’s climate, but also position their organizations for tomorrow’s financial confusion (Parry & Humprey, 2009).
The economic crunch has several effects to hospitals. First, the capital crisis is making it difficult and expensive for hospitals to finance facility and technology needs. Currently, there is an increased cost of borrowing and decrease access to financing. To be specific, nowadays there is an increased interest expense for variable rate bonds, increased collateral requirements, and inability to issue bonds. In addition, the hospital is also having trouble refinancing auction rate debt and inability to renew credit, coupled with acceleration of debt and inability to withdraw funds held by financial institutions. As a result, many hospitals are reconsidering or postponing investments in facilities and equipment (American Hospital Association, 2008).
Second, according to American Hospital Association (2008), many hospitals are seeing the impact of the economic downturn on the number and mix of patients seeking care. There are lower admissions and number of elective procedures have drop significantly. Hospitals are seeing significant decrease in inpatient and ambulatory surgeries, as well as emergency room visits. Employees who have been laid off became uninsured. For this reason, they are putting on hold their health problems and postpone or defer elective procedures.
Third, rising unemployment caused an increased uncompensated care. For every one percent increase in unemployment leads to a loss of employer sponsored coverage for an estimated 2.5 million employees and dependents. The majority of hospitals are seeing an increased in the proportion of patients unable to pay for care, and the need for subsidized care is increasing. With patients unable to pay, more physicians are seeking financial health from hospitals (American Hospital Association, 2008).
Fourth, financial health is worsening as patients seek less care and investment gains turn to losses. Many hospitals making or considering cutbacks by cutting administrative costs, reducing staff, reducing services, divesting assets, and considering merger (American Hospital Association, 2008).
Fifth, according to Smith, Rudowitz, O’Malley, & Marks (2008), stresses on state and federal budgets raise worries about cuts to Medicaid and Medicare provider payments. The Medicaid programs support half of patient care provided but the program is severely underfunded. Consider that Medicaid expenditures that have the largest portion of many state budgets have increase during this economic crisis even as the state tax revenues drop (Smith, et.al, 2008).
Sixth, as the economy weakens, hospitals are shifting insurance costs in the form of higher deductibles or higher co-pays for employees. This is very ironic considering that hospital provides care to patients. However, with the increasing cost of insurance premiums, the hospitals need to find cost-cutting measures to survive (Marmont & Bell, 2009).
The economic environment, exacerbated by the credit crisis, has put the healthcare industry in puzzling waters. The industry's quick response to this challenge is encouraging, but tough times lie ahead. Hospitals that address changing patient demands and shifting reimbursement cycles will be better positioned to mitigate the economic downturn (Hartman, Martin, McDonnell, & Catlin, 2009).
The Joint Commission (2008) in response to economic turmoil issued a report that directs hospitals to respond in new ways as escalating health care costs are hitting record highs and the conditions and care needs of hospitalized patients are growing more complex. The report is the work of an expert panel comprising hospital executives and clinical leaders, as well as experts in technology, health care economics, hospital design and patient safety.
The report recommends action in five core areas. The first core area focuses on economic viability. For hospitals to be economically viable, they must align performance and payment systems to meet quality and efficiency-related goals. Hospitals must use process improvement tools to increase efficiency, reduce costs, and pursue coverage options to ensure patient access to affordable health care services. It is also important to address how general acute hospitals and specialty hospitals can both fulfill the social mission for health care delivery (The Joint Commission, 2008).
The second core area is technology adoption. Information technology plays a major role in improving health care quality and safety, and can help to support the migration of hospital-based care into the community and even the home. The technological transformation of health care also invites the redefinition of the hospital (The Joint Commission, 2008).
To address technology in the future, hospitals should make the business case and sustainable funding to support the widespread adoption of health information technology, and redesign business and care processes in tandem with health information technology adoption. The hospital must also use digital technology to support patient-centered hospital care and extend that care beyond the hospital walls and hiring reliable authorities that will assess the technology and technology investment guidance. Moreover, the technology must be laborsaving and integrative across the hospitals (The Joint Commission, 2008).
The third core area is patient-centered care. The patient has the greatest stake in their care. Thus, patient needs to be respected as an equal partner in their care to promote quality and safety. Family members or others to whom the patient is emotionally tied are also part of the health care partnership (The Joint Commission, 2008).
According to the Joint Commission (2008), achieving patient-centered care should be driven by adopting of patient-centered care values that is a priority for improving patient safety and patient and staff satisfaction. Hospitals must also incorporate patient-centered care principles into the activities of hospital oversight bodies and transparency initiatives and address barriers to patient and family engagement. Moreover, hospitals must eliminate disparities in the quality of care for minorities, the poor, the aged and the mentally ill as well as improving the quality of care for the chronically ill through coordinated, multi-disciplinary care.
The fourth core area is staffing. Work force shortages have persistently plagued hospitals over the last several years. To address the fact that demand for certain health care professionals outstrips supply and to meet the needs of patients, the hospitals must establish fair migration and compensation policies for countries facing shortages of health care workers and expand health professional education and training capacity to accommodate the growing demand for health care workers.
Hospitals must also create workplace cultures that can attract and retain health care workers by develop professional knowledge and skills necessary in a more complex health care environment (The Joint Commission, 2008).
The fifth core area is hospital design. Hospital must improve safety with evidence-based design principles such as single rooms, decentralized nursing stations and noise-reducing materials. It is also important to address high-level priorities, such as infection control and emergency preparedness, in hospital design and construction. Inclusion of clinicians and other staff, patients and families in the design process to improve staff work flow and patient safety, and create patient-centered environments are vital processes to observe to promote safety (The Joint Commission, 2008).
The core areas were the result of the analysis of how socio-economic trends, technology, the physical environment of care, patient-centered care values and ongoing staffing challenges will influence the hospital of the future (The Joint Commission, 2008). The Joint Commission urges hospitals and public policymakers to use the principles embedded in their report to achieve that aim.
For the nurse leaders, they should play a pivotal role in implementing innovative strategies to enhance revenue for the organization. Strategies may include cutting supply costs, decreasing patient length of stay and limit or abolish overtime hours for the staff. According to Buerhaus (2008), in these economic downturn nurse leaders must restructure health care delivery on individual floors and spearhead innovations. The restructuring of the delivery system in the floor may be carried out by consolidating supplies to allow nurses to spend more time in the bedside, thereby increasing patient satisfaction scores and anticipating staffing mix in response to patient acuity.
When times are tough, nurse leaders and managers must avoid unilateral thinking. Nurse leaders must act with authenticity and determination to seek out voices and opinions contrary to prevailing thought. The nurse leader must go beyond the traditional to the nontraditional, to people, places, and resources that are not familiar to get a better grasp of the situation on hand. In addition, nurse leaders must be decisive in term of budget allocation, forecasting, and cost reduction (Boyd, 2008).
Finally, nurse leaders must stand ready in these tough times to educate patients and
their families about the uncertainty and unexpected financial cost associated with acute and chronic disease and the importance of staying healthy. In this tough economic time in health care, CEOs, physicians, nurse executives, administrators, financial advisors and department managers must understand and apply the principles of human and fiscal resources to stay afloat.
References:
American Hospital Association (2008). Rapid Response Survey. The Economic Crisis: Impact on Hospitals. Trendwatch. Retrieved from http://www.ihatoday.org/econcrisisreport.pdf
Boyd, D. (2008). State Tax Revenue Now Flat, for the First Time Since 2002 Recession: After Weak Third Quarter, Further Declines Likely Lie Ahead. The Nelson A. Rockefeller Institute of Government. Retrieved from http://www.rockinst.org/newsroom/news_releases/2008/2008-11-06state_tax_revenues_across_u.s._are_flat_for_first_time_since_2002_recession_new_rockefeller_institute_flash_report_shows.aspx
Buerhaus, P., Auerbach, D., Staiger, D. (2008). Recent trends in the registered nurse labor market in the US: Short-run swings on top of long-term trends. Nursing Economic$, 25(2), 59-66. Retrieved from http://www.medscape.com/viewarticle/556417_1
Hartman, M., Martin, A., McDonnell, P., & Catlin, A. (2009). National health spending in 2007: Slower spending contributes to lowest rate of overall growth since 1998. Health Affairs, 28(1), 246-261. doi: 10.1377/hlthaff.28.1.246
Marmot, M. & Bell, R. (2009). How will the financial crisis affect health? Business Management Journal, 338, 858-60. doi:10.1136/bmj.b1314
McNichol, E. & Lav, I (2008). State Budget Troubles Worsen. Center on Budget Policy and Priorities. Retrieved from http://www.cbpp.org/archiveSite/9-8-08sfp.pdf
Parry J. & Humphreys G. (2009). Health amid a financial crisis: A complex diagnosis. Bulletin of World Health Organization, 87, 4-5. Retrieved from http://www.who.int/bulletin/volumes/87/1/09-010109/en/index.html
Smith, V., Rudowitz, R., O’Malley, M., & Marks, C. (2008). Headed for a Crunch: An Update on Medicaid Spending, Coverage and Policy Heading into an Economic Downturn. Kaiser Commission on Medicaid and the Uninsured. Retrieved from http://www.kff.org/medicaid/upload/7815.pdf
The Joint Commission (2008). Health Care at the Crossroads: Guiding Principles for the Development of the Hospital of the Future. Retrieved from http://www.jointcommission.org/NR/rdonlyres/1C9A7079-7A29-4658-B80D-A7DF8771309B/0/Hosptal_Future.pdf
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