The hospital facility market size for the US alone was $1.3 trillion in 2021.
The medical industry is one of the most expensive ones to manage. Running a hospital means keeping a close eye on the budget and finding ways to save money where possible.
Keep reading to learn some of the things a healthcare administrator can do to keep the hospital finances in order.
1. Operational Budgeting
While most institutions operate with a budget, it’s important for medical facilities to stick to them. Specifically around operational budgets, as these are arguably the most important for the institution.
Operational budgets refer to the money paid for services like the salaries of hospital employees. This also includes training budgets and paying for overtime.
The hospital budget has to make sure the hospital can operate under any circumstances. This means emergency funds need to be in place to ensure operations can continue if there’s an unexpected problem with the budget.
2. Equipment Budgeting
Refurbished medical equipment is equipment that has been checked by a technician to ensure it works properly after a change. This could be like a part being replaced.
Refurbished equipment, since it’s not new, is much cheaper. This means hospitals can save lots of money by buying this equipment instead. It works the same but is far more budget-friendly.
Check out these refurbished anesthesia machines as an example.
3. Use Rolling Forecasting
The budget is worthless if it isn’t informed by good data. Hospitals ensure their budgets will cover what they need to by using historical data.
This means tracking expenses over the previous years to spot trends and predict incomes and expenses.
4. Offer Financing Options
Medical procedures are usually enough to bankrupt someone without health insurance. The best way to keep money coming into your hospital without any issues is to offer flexible payment options to your patients.
This means giving them the option to pay their bills over several months at set rates. In the best cases, there are a few options for your patients to choose from.
This is more work for the financial department at the healthcare facility. But it’s worth it because it means there is always a steady stream of money coming into the hospital.
5. Negotiate With Vendors
As with any sale, there is often room for negotiation from vendors. Hospitals are huge customers, and they’re usually buying in bulk. This means vendors are more likely to want to make them happy customers and to keep them coming back.
The administrator managing healthcare finances might negotiate with vendors to get reduced prices where possible. Even if these are small reductions, they can improve the business relationship and it’ll financially add up over time.
Managing Hospital Finances
Keeping track of hospital finances isn’t easy. The medical industry is so expensive, so it’s helpful to find smart ways to save money wherever you can.
These are some of the ways hospitals can manage their finances to reduce costs.
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