Friday, July 16, 2010

Ten Practices for Increasing Hospital Profitability: Tip #8

As we approach the end of the profitability practices list, today I want to focus on adding profitable service lines. The key to this is not only knowing their general profitability in most markets but also how they will perform in your particular market.

Tip #8: Consider adding profitable service lines

Building profitability is a combination of becoming more cost efficient and adding new business. You must do both if you are to succeed. Sometimes adding new business to your existing services is not a real option. In that case the only way to get additional business is to add new service lines. Any service provided by a hospital must either meet a critical community need or add to the hospital's bottom line. Ideally a service will do both. But when looking to add new service lines you must not only know that they are profitable in general, but that these needs are not already being met in your market.

Some profitable service lines like bariatric surgery, plastic surgery or hyperbaric oxygen therapy may not be seen as supporting the main hospital mission. But actually they do. It is the profit from these services that help finance those under-reimbursed core services and allow you to treat uninsured patients in your community.

When looking at new service lines, determine what the market needs and where you will get the referrals from. Again you need to be talking to your physicians about their needs and the number of cases they may be referring to the new service line.

Even in an era of shrinking reimbursement for services, there are still some service lines out there that can boost your bottom line. You may just have to look a little harder to find them.

More on profitability practices on Monday.

Mark Brodeur

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