Unfortunately, hospital and health care budgeting of resources has become increasingly important in this cost-conscious era of health care. The last decades of cost-controlled medicine have required fiscally conscious approaches to the healthcare for many organizations, often at the expense of patient services. A financial analyst must strive to minimize this, yet still keep the organization afloat. A segment that does not make money or at least break even for the health care provider may have to be eliminated.
Health care facilities may take longer to break even on their initial investment than other forms of businesses. Also, the break-even period for primary care is different compared to tertiary care. Still, developing any break-even action plan begins with a clear understanding of any significant shortfalls against benchmark, with a special focus on provider productivity in terms of visits, relative value units (RVUs), and net patient revenue. Ideally, office or site managers can assist in the development of a break-even action plan using break-even analysis to ensure that patients are inconvenienced as little as possible.
Remember, if break-even analysis is not effective, the entire operation may be compromised. In fact, “some hospitals are divesting themselves of their group practices. ” But “others are attempting turnaround strategies to help them break even on their investment. Ensuring that expenses do not exceed revenues in a primary care network can be achieved by implementing initiatives on network-wide and practice site levels and may require draconian measures.
” But by being willing to set “a financial target of break-even, primary care practices can experience dramatic improvements. ” (Halley & Lloyd, 2000) Reducing the number of provider and nonprovider staff, closing practice sites, consolidating resources into fewer physical locations, and revising compensation and benefit plans are the most obvious ‘draconian’ measures. Networkwide initiatives include expense reduction and control to achieve break-even benchmark targets.
Within the hospital, documenting the baseline revenue and expense ideas for performance tracking, identifying revenue shortfalls, or gaps, in key revenue and expense areas that are barriers to achieving break-even financial operation, ensuring that every physician and nonphysician caregiver has a productivity target in terms of visits and instituting quality control measures nad reviews are all essential. Bibliography : Halley, Marc D. & Lloyd. (Nov 2000) “How to Break Even on an Acquired Primary Care Network. ” Healthcare Financial Management. Retrived 17 Apr 2005 at http://www. findarticles. com/p/articles/mi_m3257/is_11_54/ai_66936335/pg_2