Reduce Corporate Services Spending in Healthcare Organizations

It is a popular opinion among the majority of executives within hospital and healthcare systems who have the opinion that corporate services spending can be reduced significantly. 

The growth of revenue is a challenging feat for healthcare systems. The low inpatient growth, coupled with stagnant reimbursement, prompts them to use M&A for their benefit and target corporate services to reduce costs. 

These economic challenges have made it mandatory that providers look for opportunities that will simplify the complex structure of the organization. At the same time, it needs to be ensured that the corporate and shared delivery services become more efficient by automation and consolidation of revenue cycle functions.

Nearly 48% of healthcare systems and hospitals spend around 10% of their operating revenue on corporate services. These include the likes of finance, communications, human resources, IT, and supply chains, among other things. 

This spending ensures that the organization does not face any problem in managing the large number of employees and can reach greater heights.

The amount that hospitals have to pay on corporate services has increased significantly, almost doubling between 2015 and 2017 as per the reports. Factors affecting spending during this period include the impact on staff due to the implementation of technology, mergers, and the focus on lowering costs. 

However, according to surveys, the spending on corporate services is now getting out of hand.

According to reports, merely 11% of healthcare systems spend 12% of their total operating revenue on corporate services efficiently. 

Furthermore, only one-quarter of executives felt that they needed to increase their corporate services spending or that it was appropriate. 

Notably, nearly 44% of hospitals were of the opinion that there was overspending on corporate services in their organization. 

Decreasing the costs

The pressure on healthcare organizations for reducing expenses is mounting with the continuous fall in reimbursement rates and operating margins being affected. 

Although most organizations wanted a way to reduce corporate spending, about 45% of them felt that the organization would have to plan a moderate increase in budget.

Executive plans on reducing corporate services spending was by focusing on revenue cycle management, IT, and apply chain. Automation will become a significant aspect of hospitals in the coming time. 

Currently, only merely 15% of executives have automated corporate services. 

A small portion of health systems have steps towards optimization of the enterprise resource planning system. The majority of these organizations opt for centralized corporate services, while some of them have a standardized approach. 

However, things are expected to change. According to surveys, most organizations plan on optimization of their ERP solution in the up and coming years. 

A lot of opportunities have come forth to discover new technologies that work in favor of ERP, machine learning, and RPA. 

Overlaying technology to solve problems without first ensuring that the process is appropriately engineered is never a good idea. This is something that most providers have learned after facing a debacle. 

Therefore, it is mandatory that everything is well-thought-out before taking that first step.

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