There are lessons to be learned from cross-subsidization in hospital care.
It's easy to understand cross subsidization.As a hospital leader, you know that there are a lot of money-losing services that you have to provide for patients that are either required by law or can't easily be eliminated.It only works if you make enough money on the profitable services so that you can continue as a concern.For a long time, cross-subsidization worked well.It can't continue.It is a declining strategy that will cause you to lose more and more each year.The system breaks down at a certain point.We have 47 million uninsured and a declining base of patients with employer-sponsored health insurance.When does cross subsidization reach a tipping point?I don't know what the answer is.You don't.Employer-based health insurance has carried the freight for our healthcare system for a long time.Government payers don't seem to be able to keep up with the costs of providing care.What are you left with?It's a vicious cycle and seems to be getting even more vicious as time goes on.Every year the number of uninsured increases.Every year, the percentage of people covered by employer health insurance goes down.It is difficult for employers to compete with overseas competitors.Yes, and no, something has to give.The current course of cross-subsidization in healthcare appears unsustainable.The government isn't paying its fair share.Competitors are nibbling at your profitable margins every year, but experience shows that negative trends can continue for many years without an acceptable solution.You can compete smarter and harder.Many of you have already gotten this message and are expanding into new markets.You already have an advantage over your competitors thanks to your nonprofit status.Hospital leaders have already moved into better paying and more consumer oriented markets through outpatient facilities and new, smaller hospitals in more affluent areas of town.This kind of arms race is brutal, not efficient, and not fair, but it is reality.You can either ignore these trends and waste away as a full-service, all-things-to-all- people traditional hospital, or you can branch out into profitable services that demand cash on the barrelhead.You have to work within the system to be able to do that.Unless you're hoping against hope that a grand solution is coming from the new president or congress to save you, competing is your only choice.Philip Betbeze is finance editor with HealthLeaders magazine.He can be reached at pbetbeze@healthleadersmedia.com to sign up for HealthLeaders Media Finance, a free weekly e-newsletter that reports on the top healthcare financial news of the week.
It's easy to understand cross subsidization.As a hospital leader, you know that there are a lot of money-losing services that you have to provide for patients that are either required by law or can't easily be eliminated.It only works if you make enough money on the profitable services so that you can continue as a concern.The model is quickly becoming a dinosaur.
Cross-subsidization worked well for a long time.It can't continue.It is a declining strategy that will cause you to lose more and more each year.The system breaks down at a certain point.We have 47 million uninsured and a declining base of patients with employer-sponsored health insurance.When does cross subsidization reach a tipping point?I don't know what the answer is.You don't.Employer-based health insurance has carried the freight for our healthcare system for a long time.Government payers don't seem to be able to keep up with the costs of providing care.What are you left with?Trying to get as much revenue as you can from those money-making services.
Cross-subsidization worked well for a long time.It can't continue.It is a declining strategy that will cause you to lose more and more each year.The system breaks down at a certain point.We have 47 million uninsured and a declining base of patients with employer-sponsored health insurance.When does cross subsidization reach a tipping point?I don't know what the answer is.You don't.Employer-based health insurance has carried the freight for our healthcare system for a long time.Government payers don't seem to be able to keep up with the costs of providing care.What are you left with?Trying to get as much revenue as you can from those money-making services.
As time goes on, the cycle seems to be getting even more vicious.Every year the number of uninsured increases.Every year, the percentage of people covered by employer health insurance goes down.It is difficult for employers to compete with overseas competitors.Something has to give.
As time goes on, the cycle seems to be getting even more vicious.Every year the number of uninsured increases.Every year, the percentage of people covered by employer health insurance goes down.It is difficult for employers to compete with overseas competitors.Something has to give.
Yes and no.The current course of cross-subsidization in healthcare appears unsustainable.The government isn't paying its fair share.Competitors are nibbling at your profitable margins every year, but experience shows that negative trends can continue for many years without an acceptable solution.You can compete smarter and harder.Many of you have already gotten this message and are expanding into new markets.You already have an advantage over your competitors thanks to your nonprofit status.Hospital leaders have already moved into better paying and more consumer oriented markets through outpatient facilities and new, smaller hospitals in more affluent areas of town.This kind of arms race is brutal, not efficient, and not fair, but it is reality.You can either ignore these trends and waste away as a full-service, all-things-to-all- people traditional hospital, or you can branch out into profitable services that demand cash on the barrelhead.You have to work within the system to be able to do that.Unless you're hoping against hope that a grand solution is coming from the new president or congress to save you, competing is your only choice.Philip Betbeze is finance editor with HealthLeaders magazine.He can be reached at pbetbeze@healthleadersmedia.com to sign up for HealthLeaders Media Finance, a free weekly e-newsletter that reports on the top healthcare financial news of the week.
Yes and no.The current course of cross-subsidization in healthcare appears unsustainable.The government isn't paying its fair share.Competitors are nibbling at your profitable margins every year, but experience shows that negative trends can continue for many years without an acceptable solution.What can you do?
You can compete smarter.Many of you have already gotten this message and are expanding into new markets.You already have an advantage over your competitors thanks to your nonprofit status.Hospital leaders have already moved into better paying and more consumer oriented markets through outpatient facilities and new, smaller hospitals in more affluent areas of town.This kind of arms race is brutal, not efficient, and not fair, but it is reality.You can either ignore these trends and waste away as a full-service, all-things-to-all- people traditional hospital, or you can branch out into profitable services that demand cash on the barrelhead.You have to work within the system to be able to do that.Unless you're hoping against hope that a grand solution is coming from the new president or congress to save you, competing is your only choice.Philip Betbeze is finance editor with HealthLeaders magazine.He can be reached at pbetbeze@healthleadersmedia.com to sign up for HealthLeaders Media Finance, a free weekly e-newsletter that reports on the top healthcare financial news of the week.
You can compete smarter.Many of you have already gotten this message and are expanding into new markets.Your balance sheet is suffering because some of you haven't.
Thanks to your status as a nonprofit, you have an advantage over your competitors.Hospital leaders have already moved into better paying and more consumer oriented markets through outpatient facilities and new, smaller hospitals in more affluent areas of town.This kind of arms race is brutal, not efficient, and not fair, but it is reality.You can either ignore these trends and waste away as a full-service, all-things-to-all- people traditional hospital, or you can branch out into profitable services that demand cash on the barrelhead.You have to work within the system to be able to do that.Unless you're hoping against hope that a grand solution is coming from the new president or congress to save you, competing is your only choice.Philip Betbeze is finance editor with HealthLeaders magazine.He can be reached at pbetbeze@healthleadersmedia.com to sign up for HealthLeaders Media Finance, a free weekly e-newsletter that reports on the top healthcare financial news of the week.
Thanks to your status as a nonprofit, you have an advantage over your competitors.Hospital leaders have already moved into better paying and more consumer oriented markets through outpatient facilities and new, smaller hospitals in more affluent areas of town.This kind of arms race is brutal, not efficient, and not fair, but it is reality.You can either ignore these trends and waste away as a full-service, all-things-to-all- people traditional hospital or you can branch out into profitable services that demand cash on the barrelhead.
I'm not saying that you shouldn't provide for the less fortunate.You have to work within the system to be able to do that.Unless you're hoping against hope that a grand solution is coming from the new president or congress to save you, competing is your only choice.Philip Betbeze is finance editor with HealthLeaders magazine.He can be reached at pbetbeze@healthleadersmedia.com to sign up for HealthLeaders Media Finance, a free weekly e-newsletter that reports on the top healthcare financial news of the week.
I'm not saying that you shouldn't provide for the less fortunate.You have to work within the system to be able to do that.Unless you're hoping that a grand solution is coming from the new president or Congress to save you, competing is your only choice.
Philip Betbeze is a finance editor.He can be reached at pbetbeze@healthleadersmedia.com to sign up for HealthLeaders Media Finance, a free weekly e-newsletter that reports on the top healthcare financial news of the week.
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