It's been a rough ride for most hospitals and healthcare providers since the Balanced Budget Act of 1997 was passed.
In fact, the industry has been in a virtual recession because of the potent combination of Medicare cuts, managed-care pressures, Y2K fixes and management miscalculations.
But as the year, the decade and the 20th century come to a close, take a look at the bright side. Congress has given back $18.1 billion in Medicare and Medicaid payment relief over five years. Acute-care hospitals should gain more than $5 billion from the new budget legislation, including the reversal of $3.6 billion in cuts to outpatient departments.
Hospitals also are making progress in correcting costly mistakes committed during their frantic rush to better compete with managed-care plans. Physician practice acquisitions, provider-owned HMOs and poorly executed integration strategies proved financial drains for many hospital systems.
Rather than cave to the doom and gloom that pervade much of the healthcare world, hospital executives should take pride in their resilience and perseverance. For example, the industry posted aggregate profits of $19.5 billion in 1998 with an overall profit margin of 5.7%. While the figures will likely decline when the 1999 American Hospital Association report is released late next year, the industry has managed to sidestep financial ruin.
Hospitals remain a ripe source of jobs. Although many health systems have laid off workers, hospital employment rose to nearly 4 million people in November, up 32,000 from a year earlier. In many communities, hospitals are the No. 1 employer, a fact that can't be overemphasized in any health policy debate.
It's time to get serious about becoming more efficient so that you are better prepared to withstand future challenges. That will take a balanced perspective and a strategy built around improving clinical quality, enhancing customer service and controlling costs.
Information technology can and must play a major role in engineering efficiency gains. But with all the dot.com hype, it's easy to get swept up in Internet hysteria.
It's unlikely that the World Wide Web will allow your organization to mint money or even generate huge revenue gains. What it can do, though, is streamline communication and reduce operational costs, two admirable achievements.