By Daniel Casciato
Healthcare organizations face mounting financial challenges in an increasingly complex landscape, threatening their stability and growth. Esther Surujon, Chief Financial Officer of Memorial Physician Group and a faculty member at Florida Atlantic University, sheds light on these pressing issues and shares actionable solutions to maintain financial sustainability while delivering high-quality patient care.
The Four Biggest Financial Challenges
According to Surujon, healthcare organizations are grappling with four major financial hurdles:
- Pressure on Reimbursement Rates
- Rising Operating Expenses
- Revenue Cycle Challenges
- Economic Downturns
“Reimbursement rates remain stagnant while costs continue to rise, particularly as the aging population increasingly relies on Medicare and Medicaid,” Surujon explains. “Additionally, the growing number of uninsured and underinsured patients contributes to higher levels of bad debt and charity care.”
Surujon highlights rising operational expenses as another critical issue, particularly the escalating costs of labor and medical supplies. “Labor shortages, especially among clinical staff, have driven wages higher, while inflation has increased the costs of medical supplies and drugs,” she notes.
Revenue cycle inefficiencies, including claim denials and payment delays, also pose significant challenges. “Such inefficiencies disrupt cash flow, which is essential for financial stability,” Surujon emphasizes, highlighting their impact on daily operations.
Addressing Reimbursement Challenges
Reimbursement changes from insurers and government programs directly affect revenue and future planning. Surujon notes, “Reductions in reimbursement rates erode operating margins, particularly for fixed-cost services like inpatient or specialized care.”
She also points to the growing emphasis on outpatient care in reimbursement models. “Many systems now incentivize outpatient and ambulatory services, which can reduce revenue traditionally generated by inpatient care,” she explains. Additionally, frequent regulatory changes lead to more denied or delayed claims, further disrupting cash flow.
Cutting Costs Without Sacrificing Care
When asked about reducing operational costs, Surujon emphasizes a balanced approach that preserves the quality of patient care. “Labor costs are the largest expense, so flexible staffing models that align with patient volumes can help minimize overstaffing or understaffing. Cross-training employees also improves efficiency and reduces overtime costs.”
To address rising supply costs, Surujon suggests negotiating bulk purchasing agreements, maintaining optimal inventory, and joining Group Purchasing Organizations (GPOs) to leverage collective bargaining power.
She also underscores the importance of discharge planning. “Ensuring that at least 40% of discharges occur before 2 p.m. and utilizing e-prescriptions can reduce readmissions and complications, ultimately lowering costs,” she says.
The Critical Role of Revenue Cycle Management
Surujon stresses that effective revenue cycle management (RCM) is critical to financial sustainability. “Streamlined RCM processes optimize cash flow, reduce bad debt, and ensure the organization can meet its financial obligations,” she explains.
Best practices include accurate patient registration, eligibility verification, and financial counseling to improve collections. Surujon also recommends investing in certified coders and conducting internal audits to minimize claim errors before submission.
“Data analytics is invaluable for tracking metrics like Days in Accounts Receivable (AR), denial rates, and cost-to-collect ratios,” she says. “These insights enable organizations to pinpoint areas for improvement and make informed decisions.”
Smaller Practices in a Competitive Market
Smaller practices face unique challenges in competing with larger healthcare systems. “It’s incredibly difficult, but smaller practices can differentiate themselves by offering flexible scheduling, personalized care, and unique services,” Surujon advises.
She also recommends joining networks or collaboratives, such as Independent Practice Associations (IPAs), Accountable Care Organizations (ACOs), or GPOs. “These organizations provide access to shared resources, revenue streams, and cost-saving opportunities.”
Building trust within local communities is essential. “Smaller practices must position themselves as accessible, high-quality providers. This is their greatest competitive advantage,” she adds.
The Power of Technology and Data Analytics
Surujon highlights the growing role of technology in financial decision-making. “Innovative tools that consolidate data into KPI dashboards provide real-time insights into operations and performance metrics, enabling leaders to make data-driven decisions,” she says.
She also views technology as a game-changer for RCM. “Automation can streamline coding, billing, and claims processes while identifying trends in denials to prevent future losses,” she explains.
Conclusion
Navigating financial challenges in healthcare requires innovation, efficiency, and adaptability. As Surujon emphasizes, “Organizations that thrive will optimize their revenue cycles, control operational costs, and embrace data-driven strategies to maintain financial sustainability.”
Her insights offer a practical roadmap for healthcare leaders to address today’s challenges and build a more sustainable future.
For more information on Florida Atlantic University, please visit fau.edu.
