Top 10 Ways for Healthcare Organizations to Utilize Capital More Effectively
Article

Top 10 Ways for Healthcare Organizations to Utilize Capital More Effectively

by Tawny Schaffer
May 21, 2021

After more than a year of significant declines in operating revenue caused by the COVID pandemic, healthcare organizations throughout the United States are searching for ways to clarify their strategic priorities and use their capital more efficiently and effectively. 

The following suggestions provide key discussion points for healthcare executives as they conduct strategic reviews and look for ways to streamline their operations, preserve capital and prepare for post-pandemic markets.

Develop a cohesive technology strategy. One consistent challenge that many healthcare organizations have is relying on a variety of disparate technology platforms, designed for different aspects of their operations, that are not integrated. This hinders the easy exchange of information between platforms and forces staff to transfer data manually from one platform to another (as well as among payors and patients). Integrating your technology platforms and deploying automation (discussed below) will streamline operations, improve efficiency and reduce costs.

Consider outsourcing. A significant number of healthcare organization employees are involved in back-office functions, specifically billing and collections. Since these functions are not central to a healthcare organizations’ core mission of serving the community and providing care, it may be more effective to outsource them to a specialist organization that offers expertise and scale in this area and has the resources to invest in modern, integrated technology to perform billing and collections more efficiently.

Consider centralizing back-office functions to a shared services center. An alternative to outsourcing billing and collection is centralizing the billing operations of several locations to a shared services center, rather than performing duplicative billing functions in disparate facilities. This provides efficiency benefits similar to outsourcing, with the key difference being the operations are performed by your employees using your technology. 

Close or absorb unprofitable ancillary clinics. It’s important to review the operating and financial performance of your care sites routinely, and to evaluate whether a site is profitable or worth retaining for other considerations. You may elect to keep an unprofitable clinic open to support your care mission, for instance, or choose to consolidate overlapping services or transfer some operations to a different location. 

Focus on your largest revenue streams. As with the analysis of your care sites, it’s important to consistently examine which services are generating the most revenue and to consider eliminating low-revenue ones. Expanding your highest revenue and most profitable services can provide a more effective use of your capital than trying to support services with revenue levels that may not justify ongoing investment and expense.

Consider robotic process automation (RPA). RPA software can improve operational efficiency by automating a variety of rote tasks that staff members perform repeatedly. Popular RPA implementations within health systems include areas such as appointment scheduling, patient accounts settlement, claims management, account reconciliations, discharge instructions, and other routine processes and tasks. 

Explore joint ventures to leverage someone else’s capital. A joint venture with another healthcare organization can provide a cost-effective way to expand your services or enter a new market without making the entire investment yourself. This approach allows both systems to address an overlapping need or market opportunity together by sharing the expenses and revenue. A joint venture will require careful negotiations and a strong governance function, but the benefits can make the set-up effort worthwhile for all participants. 

Use telemedicine to improve the utilization of existing real estate and enhance the patient experience. The use of telemedicine expanded considerably in 2020 as the pandemic reduced the safety and availability of in-person consultations, and the advantages are likely to continue going forward. Telemedicine can provide an efficient experience for providers and patients alike by reducing travel and waiting time for patients, and can help healthcare organizations use their real estate more efficiently by reducing the number of care sites and offices they need to maintain.

Outsource your on-site pharmacy. Although patients need ready access to medication while they are receiving care, there are alternatives to the traditional model of a health system running its own pharmacy within each facility. Outsourcing pharmacy management services to an outside provider who operates the in-house pharmacy on your behalf offers ready access to medication while optimizing your formulary and operating expenses.

Overall, it’s important to think about different ways to optimize your operations and to identify strategies for helping your capital work more efficiently. While there are functions and services your healthcare organization will want to perform itself, there may be more cost-effective approaches that can help you maintain your desired quality of care and revenue levels while reducing operating cost and complexity.

To learn more about optimizing your operational efficiency, contact our healthcare experts.

Stay In Touch

Sign up to stay up-to-date with the latest accounting regulations, best practices, industry news and technology insights to run your business.

Author
Tawny Schaffer, CFO Advisory Services, Armanino
Senior Director
Resources
Related News and Insights
Regulatory and Industry News Alerts from Armanino
Article
The plan to alter tax policy in 2022 includes tax rate increases, but also expanded savings opportunities.

June 17, 2021
Don’t Overlook This Trap in Deducting Accrued Bonuses for Tax
Article
Healthcare organizations that pay accrued bonuses must meet these conditions for deductibility.

March 29, 2021
Provider Relief Funds – OMB Compliance Supplement Addendum
Article
If you received COVID-19 relief from the HHS, you may be subject to additional audit requirements.

March 04, 2021