HEALTHCARE IN A LOUSY ECONOMY

Jeff Lutz describes 6 lessons to be learned about the healthcare industry in a lousy economy in the August 14, 2008 issue of H&HN magazine .

1. Healthcare isn't immune to economic cycles - witness the auction bond market


2. The payer mix changes - co-pays and deductibles are up and fewer people are covered by commercial insurance


3. As the self-pay portion of the bill rises, bad debts increase


4. Hospital volume drops off, especially the "good stuff" - as insurance costs increase and unemployment increases, families use less health care and more ER facilities


5. Everybody is expanding geographically to capture market share - increasing marketing and advertising costs to meet the increased competition


6. Mergers happen more quickly - because hospitals lack the financial muscle to ride out the economic downturns

On an upbeat note, Lutz does note that while hospitals are not happy with their profit margins, those with strong balance sheets are able to invest in physicians, services and technologies and position themselves for the future when the economy turns.

Many healthcare and financial commentators also notes those healthcare organizations that have strong balance sheets are better able to survive the fluctuations in the financial markets. A key to a strong balance sheet is managing debt and controlling your financial ratios. One tool healthcare executives use is a Medical Accounts Receivable funding program from Sun Capital HealthCare Inc.

The cash infusion that you receive from Sun Capital is debt-free and without the restrictions normally associated with bank loans and lines of credit. As Lutz indicates, by having a strong balance sheet, healthcare organizations in a lousy economy can improve their performance and more readily survive the financial fluctuations of a lousy economy.