Rural Hospitals – Do Supply Chain Cost Reductions Matter?
One thing is certain: the effects of the Affordable Care Act (ACA) in the short term are uncertain. This is particularly true for rural hospitals. The Supreme Court is expected to issue its ruling later this month on the ACA (King v. Burwell). If the Court rules against the Administration, states will be in various camps regarding the likelihood of creating state run exchanges. Under the current law, hospitals have seen a financial improvement in 2014 – in states with and without Medicaid expansion.
The uninsured rates across the country are down and revenue growth and operating margins are up. Healthcare reform and Medicaid expansion no doubt contribute to this rise along with an improving economy, better negotiated commercial insurance rates, and acquisitions of small hospitals, to name a few. Singling out just one or a few causes for these improvements is risky. Healthcare leaders (especially in rural markets) must continue to be vigilant in their focus on factors over which they exert some control. Non-labor costs represent the second largest expense line in the hospital budget. Managing supply chain costs, seeking improved productivity and implementing process improvements are key areas for small hospitals. Many are ripe for improvement.
Another thing that is certain: rural hospitals must continue to identify, target and implement opportunities to manage and reduce non-labor costs while continuing to maintain high levels of quality care. Managing controllable expenses is a certainty in these uncertain times.
Rural hospital revenue remains vulnerable to regulatory changes; Cost pressures continue. See
“Where Medicaid expansion matters: Small Illinois hospital expands while Missouri counterparts cut back”
By Beth Kutscher | June 6, 2015
Tags: Affordable Care Act, healthcare costs, Medicaid, rural hospitals
