Wednesday, May 13, 2009

Revenue vs. Costs

Remaining financially viable, as we know, was a difficult proposition for many hospitals long before the economic downturn took hold both in the U.S. and globally. But as the economic challenges continue, multiple hospitals and health systems are facing even greater financial challenges as they try to maintain their margins. Some recent research studies utilized several metrics and indicated that over 60 percent of the 5,500 non-profit hospitals in the U.S. are in financial crisis.

Clearly, a major task for both hospitals and health systems is striving to balance their revenue with their costs, an increasingly complicated undertaking because of such factors as the continuing shift to outpatient care (which CHRISTUS has been predicting and planning for) and the expanding payment shortfall relative to costs for Medicare and Medicaid. In addition, CHRISTUS Health has many facilities and programs in Louisiana and Texas, two of the states with the lowest Medicaid payments, which has been verified by the Kaiser Family Foundation.

Because CHRISTUS Health has experienced significantly lower revenues for similar services than other health care providers, it has had to develop a lower cost structure, now one of the most competitive among Catholic health care systems. In addition, during our first decade, CHRISTUS has also seen significant improvement in both our clinical quality and service quality metrics. Hence, as we continue our Journey to Excellence, obtaining our goal to be one of the highest quality, lowest cost health and wellness providers appears to be within our reach.

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