Are Advances In Analytics The Key To Increasing Hospital Profit Margins?
As big data analytics systems improve, more opportunities surface that could help with boosting hospital profit margins. Here's why that's so important.
Earlier this year, Jennifer Bresnick wrote an article for Health IT Analytics on the priorities that hospitals have regarding data analytics. She stated that data vendors have been advertising the benefits of big data analytics to hospitals of all sizes. However, hospitals have been conservative about investing in them. Data vendors have pointed out that their solutions can help streamline cumbersome processes and slash costs. Apparently, they have not made their case strongly enough though. Hospitals have insisted that they are more interested in improving their quality control processes and considering how to provide better outcomes for patients than reducing their cost structures. These are both necessary priorities. Healthcare advocates appreciate the fact that hospitals are prioritizing patient care over their own bottom lines. The problem is that cost-effectiveness eventually needs to become a top priority. There are three reasons this needs to be a stronger focus in the years moving forward:
- The average ROI of hospitals around the country has been low for many years. A report from Moody’s shows it was around 2.7% in 2016. It had fallen from 3.4% the previous year. Part of the problem is due to rising operating costs, but cash flow has fallen as well. This was the continuation of a long-term trend towards lower revenue and falling profit margins.
- Healthcare costs remain a top concern for the American public. So far, most of the blame has been placed on health insurance providers. However, a growing number of people are starting to recognize that healthcare providers are ultimately responsible for rising healthcare costs. This coming January, they will be required by law to publish their prices to prospective patients. Patients will start to realize how expensive their healthcare costs really are, which may put more pressure on hospitals to lower prices to be competitive.
- There is a growing demand for a Medicare For All healthcare system in the United States. The problem is that steep healthcare costs are going to make it nearly impossible to sustain a Medicare For All universal healthcare system. Hospitals need to recognize that such legislation could go into effect and it would probably include new policies persuading healthcare providers to reduce their costs.
All of these variables are things that hospitals need to keep in mind. They will be under growing pressure to reduce hospital operating costs in the years moving forward. This includes implementing new data solutions and medical app development.
Could Big data be the solution to keeping costs in check?
Hospitals are not going to be able to avoid public pressure to reduce their operating costs indefinitely. Their administrators are going to need to think outside the box to bring those costs in line with new targets if they hope to keep their jobs in the face of rising public pressure and new legislation requiring them to trim costs. The good news is that big data could help them meet those goals. How much could big data solutions for hospitals save them? The simple answer is – a lot. One healthcare data analyst is helping hospital save millions of dollars. Since the standard operating costs are over $50 million a year for a midsized hospital, this is nothing to sneeze at. The cost savings of big data will become even more significant in the future. Healthcare analysts are going to play a more important part and the ROI of their solutions will be even more significant. Some of the old criticisms are still going to hold. Healthcare advocates are going to protest the desire to put a hospital bottom line ahead of patient care. However, they are going to be forced to look at the data from my more pragmatic lens as concerns of rising costs continue to mount. Even the most idealistic advocates are not going to be able to ignore the harsh reality that rising healthcare costs are a serious burden that needs to be addressed.
Cost Concerns Force Healthcare Data Experts to Push for Efficiency
This means healthcare analytics experts will continue to find new ways to make costs lower. The good news is that there are many ways that they can embrace data to bring costs in line with new targets. This can help trim operating costs and substantially lift profit margins.
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