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6 Revenue Pressures Create Negative Outlook for NFP Hospitals

Rene Letourneau, for HealthLeaders Media, June 30, 2014

2. Increased competition

NFP hospitals are searching for ways to increase market share as utilization drops, and most are trying to expand their service area footprint, which is creating aggressive competition in most markets, Arrick says.

"There is more competition for patients, and as the number of inpatients goes down, hospitals are beginning to compete in different ways and are trying to expand their geography," he says.

"They need bigger feeder networks, whether they go out and acquire them or they enter into affiliations. We are seeing larger systems going out further from their home base to try to bring in more patients. Everybody is trying to enlarge the funnel to get key cases to come to the home office, so to speak. Obviously, not everyone can win at that game."

3. Pressure on capital and operating budgets

As the need for investment in brick and mortar assets declines, hospitals are turning their attention to their IT capabilities. The financial outlays are enormous, yet efficiency gains from IT will be elusive, Arrick says. "A lot of money is going into IT, so that is both capital dollars and operating dollars, and not every IT install goes well," he says. "Once IT is up and running, that does offer benefits both in finding ways to cut expenses further and also in finding best practices and disseminating them more quickly. However, best practices are going to reduce complications and reduce admissions and readmission, so improving these [quality measures] is going to impact finances."

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