Why Hospitals Are Still Losing Money and How They Can Reduce Costs

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Despite focused efforts to recover from the financial damage caused by COVID-19, U.S. hospitals continue to lose money, according to Kaufman Hall. Recovery has been slow, and many hospitals continue to experience significant financial challenges.  

Ongoing Struggles  

Even with initiatives to rein in costs and improve productivity, hospitals are experiencing long term financial pressure. They are looking inward to growing their workforce and cutting reliance on expensive contractors. They are tapping digital technologies to improve efficiency and support their staff. However, inflation and rising salaries have kept expenses high, while insurance reimbursement rates haven’t kept up.  

In 2024, 40% of hospitals were operating at a loss, and although that number has dropped to 37% it is still troubling. In recent months, many hospitals have been forced to announce layoffs, restructure, or cut services.  

A Growing Divide  

What’s concerning is the gap between high-performing and low-performing hospitals. While some hospitals are investing in AI technologies and raising staff salaries to attract and retain top talent, others are struggling just to keep up. As the divide continues to widen, and it’s not just about money—it’s about the quality-of-care hospitals can provide to their communities.  

Kaufman Hall’s data shows that some hospitals are improving, with an average margin of up to 4.9% by the end of the year. But this increase fails to talk about rising expenses, combined with soaring supply and drug costs. While some hospitals manage to adapt and grow, others face tougher times and are unable to keep pace.  

Looking Ahead: A Balancing Act  

To stay afloat, hospitals are expanding revenue streams and improving efficiency. With physician burnout and staff retention top of mind, many are also pushing for value-based care like offering high-quality care at lower costs or at-home care.  

Here are three ways they can reduce costs while improving care:  

  • Internal Talent Development: Rely less on expensive contractors and build a strong internal talent pool to reduce the costs associated with hiring temporary staff. Invest in employee training and offer career advancement opportunities, helping hospitals to create a loyal and skilled workforce.  
  • Digital Technologies: Automating routine tasks like scheduling or billing lets hospitals free up resources and reduce operational costs. This helps clinicians provide more accurate diagnoses and treatment plans, which can result in improved patient outcomes and more cost-effective care delivery.  
  • Patient Monitoring Technologies: Another area where hospitals can save money is in patient monitoring. For example, traditional thermometers can be inefficient, especially in busy hospital settings where time and accuracy are critical. Exergen’s Temporal Artery Thermometers are non-invasive, quick, and accurate, reducing the need for more costly, time-consuming approaches. By reducing the time spent on each patient’s routine care, hospitals can increase efficiency. 
  • Recurring Costs: Using disposables impacts monthly budgets. The costs seem to be small but at the end of the year it becomes an astonishingly large amount. As most of the disposables like thermometer caps are used invasively, to get rid of this contaminated waste, must be added to the recurring costs as well. Bummer, as these costs could be completely avoided by using Exergen’s Temporal Artery Thermometer. Saving money while reducing medical waste must sound a lot better for hospitals with a ‘green’ mission statement as well. Killing two birds in one stone. 

While financial stability will not be immediate, there are steps hospitals can take to reduce costs without compromising patient care. By developing internal talent, embracing digital technologies, and utilizing smarter patient monitoring tools, hospitals can create a more efficient, cost-effective system that improves patient outcomes and their bottom line.  

Source,  

EXERGEN P/N 850359, Rev 1