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Staying high and dry during the perfect storm

by Heather Mayer, DOTmed News Reporter | September 09, 2010
This report originally appeared in the August 2010 issue of DOTmed Business News

Hospitals are being hit hard with financial hardships, and as the uncertainty of health care reform law lingers, they continue to struggle to find ways to cut costs without compromising quality.

In 2010, it isn't just a weak economy that plagues hospitals across the country. Loss of insurance coverage and a draining of savings due to unemployment pose challenges for health care facilities as well. Patients are now delaying elective surgeries, a big revenue generator for hospitals. When it comes to nonprofit hospitals, the picture is even grimmer. Endowments and charitable contributions have slowed to a trickle as donor finances drain away.

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"It's a perfect storm of issues...that really challenge the finances and the ability [for hospitals] to deliver," says Gary Blackford, CEO of Universal Hospital Services, a medical equipment management and solutions provider.

While these financial issues aren't anything new, Blackford points out that their increased severity is what's really challenging hospitals.

"The severity of this [recession] rivals the Great Depression," he says. "Have we seen health care reform? Yes, but not combined with the recession...They've all come together at one time in severity and created extraordinary challenges for hospitals."

In order to confront these obstacles and not be held back by financial restraints, hospitals could benefit from better equipment management. Focusing on bringing together the technology, staff and processes used to keep track of assets. Having a handle on these areas will help drive down capital and operating costs, which improves efficiency and patient outcomes.

Blackford explains that hospitals tend to lose a lot of money with upfront costs to acquire certain equipment. But it also costs a big chunk of change to insure, maintain and repair this equipment.

"Our perspective is that with those large costs, you're not getting the full benefit of the equipment you've acquired," he says. "In many cases, in a hospital setting, not only is there that direct loss in operating costs, but the unintended consequences in managing equipment poorly, which can lead to higher infection rates."

Hospitals generally run into money problems after purchase, Blackford explains. They don't always factor in the costs of maintaining equipment or of training staff to operate new or upgraded equipment. When budgeting, hospitals should be mindful of not only the upfront costs of purchasing equipment, but also the costs of repair, maintenance and training.