There was a time when doctors and hospitals were able to concentrate on simply keeping patients healthy. In today’s highly competitive and regulated health care environment, it is tough enough just to keep up with the changing rules coming out of D.C. and Tallahassee. Many hospitals, health care providers, and related businesses spend countless hours focused on maximizing / chasing their medical reimbursements. Even a percentage point or two can translate into significant reimbursement savings. Sometimes the C-suite becomes so focused on the trees, that a look at the forest could be in order.
Typically, the top 2 or 3-line item on your hospital’s or company’s P & L statement is your real estate spend. Perhaps while you have been focused on the reimbursements and health care, you could be missing out on some financial relief. If you could save as little as 1% or 2% on your real estate spend, it could help to offset your reimbursements challenges. What if you could increase that by 10% – 20% savings on the real estate spend?
Hospitals and medical properties are expensive to build and upkeep. These facilities require above average specifications on infrastructure and tenant improvements. Everything from air quality to redundant power and back-up generators, beefed up energy grid, surgical gasses, special lighting, fire suppressant systems, and the list goes on. Years ago, hospitals became mini-cities with every sector under one roof. These components include C-suite, operations, administrative, business offices, doctors’ offices, medical wings, imaging, patient rooms, ER, ORs, restaurant, and the list goes on. Each of these pieces is important to run a hospital or health care entity.
Is it necessary for every hospital component to be located on the hospital campus? Does a business office really need high tech air filtration? Does administration require back- up generators and redundant systems? What percentage of your hospital’s square footage is income- producing patient care?
If you could relocate 20% of your non-income producing square footage to an off-campus location, and replace it with 20% more of income producing patient care, how would this impact your reimbursements?
To be continued…