It doesn’t take an MBA from Harvard to know that if your profit margins are rising but your expenses are increasing proportionally, your business isn’t growing — and recent data shows the healthcare hindrances; exactly what’s happening in the hospital industry.
According to Definitive Healthcare, the average net patient revenue at U.S. hospitals has increased from 282.7 million dollars in 2014 to 334.5 million USD in 2018, resulting in a 51.8 million USD rise in profitability over that time. The problem is that average operating expenses increased by a nearly identical amount, growing from 264.2 to 313.9 million USD over the same interval — an increase of 49.7 million USD.
The takeaway from these figures is clear: improving patient revenue alone is insufficient in ensuring a hospital’s growth. The curbing of expenditures is a critical part of any health care facility’s long-term growth plan, which is why effective hospital budget planning is a necessity for reducing wasteful spending.
A Smarter Hospital Budget
It’s true that some operational costs cannot be avoided and are dependent upon external factors such as governmental regulations, increases in pharmaceutical costs, etc., but a surprising amount of hospital costs are the result of highly controllable variables. Hospital budgeting software like Tradogram helps rein in wasteful healthcare spending by providing process oversight on each. Here’s how:
- Overspending – The healthcare industry is inherently fast-paced and high-intensity, so it is not uncommon for procurers to approve the purchase of an item without giving it the full evaluation it deserves — if they evaluate it at all. Tradogram’s procurement software features permission controls that require that items over a certain price be approved by a manager first, thereby reducing maverick spending.
- High purchasing regulations – The excess amount of bureaucracy and regulatory red tape results in employee inefficiency, and even incorrect equipment purchases. The program keeps all members of the purchasing team on the same page by using multi-level management so that overlapping duties can be streamlined into a more efficient process workflow. Perhaps the simplest and most effective feature of all: Tradogram enables all users to access its software from any device with an internet connection, allowing team members to work from anywhere.
- Intensive software – Healthcare providers have some of the most stressful jobs on the market, and there is often little time for acclimating users to software with a high learning curve. Tradogram’s software is intuitive and training-manual-free, enabling healthcare providers and purchasers to take advantage of all it has to offer, without the hassle of getting used to a new program.
By providing better monitoring over wasteful or incorrect expenditures and streamlining business processes to boost productivity, Tradogram is proving itself to be an indispensable tool in the hospital budgeting process. By using this software, facilities have been able to identify multiple waste points that have reduced hospital operating costs, and have improved their profitability as a result.
Improving Hospital Budgets, Improving Hospital Care
While hospitals are undoubtedly businesses, their primary aim is about much more than making money. As the entire healthcare industry, hospitals are about patient care first — an objective that is hindered when valuable resources are wasted on incorrect equipment and process inefficiencies.
By reducing operational expenses with a more insightful hospital budgeting process, profitability will increase, but so will the quality of care that hospitals can deliver. Rein in wasteful spending in your hospital budget, and your hospital will be empowered to provide superior patient care in the process — the goal of all hospital budget planning.