Reducing capital spending, renegotiating vendor contracts, freezing salaries, reducing staff, and developing contingency budgets are among the tactics hospitals are using to combat declining margins, according to a new survey from HFMA’s Healthcare Financial Pulse project.
The majority of financial executives who responded to the HFMA survey said their organizations experienced negative fallouts from the recession in the second half of 2008, including declines in nonoperating revenue, patient revenue, and days cash on hand. Large hospital respondents had the largest dips in investment portfolios, while rural hospitals took the biggest hit on patient revenue. Read the full survey results.
Sixty-two percent of hospital finance executives who responded to the survey have developed budget contingency plans that spell out temporary or permanent expense reductions that must occur if margins/revenues decline to a certain level or if other financial triggers are hit.
Other tactics identified in the HFMA survey: reducing capital spending, changing debt structure, containing labor costs, reducing nonlabor costs, enhancing productivity and efficiency, engaging staff in financial performance improvement, protecting cash flow, and increasing efforts to protect or expand volumes.
HFMA’s Healthcare Financial Pulse project is sponsored by McKesson and RelayHealth. More information and additional project resources are available at www.hfma.org/pulse.
