The Business of Healthcare
Healthcare management, which deals directly with the financial and business side of healthcare, has become a critical component in overseeing the personnel, facility operations, finances and information technology of a healthcare organization. Improving the efficiency and quality of patient care while reducing costs has become a mantra in the modern healthcare industry, which has been beset by a number of financial challenges
Financial Challenges Facing Healthcare Providers
The healthcare industry faces new challenges every day, and it is up to healthcare managers or administrators to strategize and address these issues while continuing to provide adequate care for patients. The implementation of new legislation, advances in technology and the shift towards specialized providers have all played a factor in dictating a shift in the way healthcare organizations focus on finances.
One challenge healthcare providers face is securing and growing market share in an environment where patients are more willing to shop around for healthcare or even choose to receive care if too expensive. An increasing number of specialty facilities has also created more local market competition. Providers must consider market strategies, including consolidation, non-traditional partnerships, strategic relationships and the feasibility of providing their own specialized services in order to maintain market share.
Many healthcare entities are finding the need to develop alternative revenue streams to stay financially viable. Health systems with cash reserves and strong margins are better positioned to make investments related to their core patient care business. Investments that can supplement declining revenue from payers include ambulatory care centers, telemedicine, business software development and pharmaceutical research.
Given this financial landscape, the most pressing challenge for healthcare providers is to control costs while still promoting the best possible health outcomes. According to the American College of Physicians, the drivers of rising healthcare costs include inappropriate utilization of advanced medical technology, payment system distortions that encourage over-use, high prices for healthcare services, a workforce not necessarily aligned with national needs, excessive administration costs, medical liability, more Americans with declining health status and chronic disease and an increase in elderly population.
Controlling these costs is imperative to promoting good health outcomes in an environment where there is increased pressure to do so. Maximizing limited healthcare resources ensures the high quality and efficiency in the delivery of services, but in order to accomplish this, healthcare organizations must understand the benefits and effectiveness of clinical procedures, recognize the major drivers of costs and identify potential solutions for achieving financial savings.
Role of Financial Management In Healthcare
In any industry, financial management involves handling routine financial operations in order to reduce avoidable, ineffective and duplicate services that increase costs and do not improve patient care. Clinically effective care can be achieved by analyzing costs and benefits of medical procedures and technologies. Healthcare providers, such as large physician practices and hospitals, may decide to offer expanded tests or treatments by buying new medical equipment. Making the decision and finding the best way to pay for it require shrewd financial management.
Healthcare managers, regardless of the setting in which they work, must constantly strive to ensure accurate pricing of services, reduce administrative costs, reduce costs from medical malpractice and create a mixed-specialty physician workforce. They must also advocate for wellness, prevention, chronic care management, changes in unhealthy behaviors and encourage patient responsibility for health and cost-consciousness.
Healthcare financial management is particularly challenging because even though its role will always remain improving patients’ lives, healthcare providers are being forced to deal with a litany of new financial challenges and paradigms that go hand-in-hand with patient outcomes. As such, providers must remain diligent about maintaining a healthy balance between costs and the provision of quality care.
If you are interested in a career in healthcare financial management, consider pursuing a degree in this field.