http://www.healthcaredive.com/news/9-ways-hospitals-can-reduce-debt/430488/
Healthcare reform has had a dramatic impact on hospital reimbursement. While millions of Americans are now insured under the Affordable Care Act, high-deductible health plans can leave patients cash-strapped after expensive episodes of care. Sometimes, patients can’t pay for the services they receive, pushing up bad debt at hospitals. At the same time, hospitals are dealing with lower reimbursements and a shift from inpatient to outpatient care, leaving some with property and beds that are no longer financially productive.
Take Community Health Systems for example. Burdened with $15 billion in debt , the Franklin, TN-based hospital chain sold a four-hospital joint venture and spun off 38 hospitals into a separate entity, Quorum Health Corp., earlier this year. Recently, the system inked deals to sell an additional 17 hospitals.
According to Patrick Pilch, head of BDO Consulting’s healthcare advisory practice, many hospitals and health systems don’t have a complete handle on what their costs of care are and they’re losing money as a result. “Understanding your costs of care as well as your cost of capital is imperative,” he tells Healthcare Dive. “Then align that to a future strategy. That’s where you’re going to pull your way out of debt.”
Hospitals should look at their assets, business plan, market and supply chain and then see how those align with their capital strategy, Pilch says. With interest rates expected to rise, non-investment grade hospitals will have a harder time getting capital. “If you have a lot of capital that’s not performing well, you’re in a bit of a state right now,” he adds.
Here are nine ways hospitals can work on debt:
HENRY KOTULA 