Cost and price pressures continue to plague healthcare providers - Data Trends - Brief Article

Healthcare Financial Management, Oct, 2001

As shown in the data below, outpatient charges as a percentage of total charges held steady through most of 2000, with a slight rebound in the first quarter of 2001. It is noteworthy, however, that this indicator has not reached the levels attained prior to implementation of HCFA's outpatient prospective payment system. Supply cost per adjusted discharge has risen over the past nine quarters, though in recent quarters there appears to have been significant variation in this statistic.

Another noteworthy finding is the trend in capital expense ratio. Although additional research is warranted, the data suggest that investment in capital equipment and facilities is decreasing. Healthcare finance professionals should watch the trend carefully over time as it may reflect a growing pressure on margins and a potential decline in investments in infrastructure.

Also of note are data on the industry's bad debt expense percentages. These findings and anecdotal evidence suggest providers are under increased pricing pressure from payers that are not paying an increasing percentage of charges. Providers, forced to pass their costs along to patients, may have difficulty collecting patient-portion amounts and ultimately may write off more of these charges.

Data for this analysis were collected from hospitals that submit quarterly financial and operational data to Solucient.

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