Innovative programs for the long-term survival of the American hospital industry

Abstract

Health care organizations have been forced to make significant changes in their operating policies over the last several years in response to decreased revenues. The major reasons for the revenue decrease include a drop in census (number of patients at any one time in a hospital), the availability of alternative health care facilities, and a change in expense reimbursement procedures by insurance agencies. Hospitals, along with insurance agencies, have responded to these causes of decreased revenues in several ways. Hospitals have started increasing their number of out-patient programs and also have begun in-house cost cutting/containment programs. Hospitals and insurance agencies have joined together in developing programs such as Health Maintenance Organizations (HMO), Individual Practice Associations (IPA), and Preferred Provider Arrangements (PPA) to combat the decrease in census at hospitals. With these programs, hospitals are guaranteed a potential patient group and insurance agencies are able to provide lower premiums to covered companies. This paper will address the reasons forwarded for the changes occuring in American hospital policies and procedures. Following this, an explanation of the new programs being developed for both hospitals and insurance agencies will be discussed. Finally, suggested cost reduction programs for hospitals in the area of pharmaceuticals will be forwarded.