Here at GVMH we are in the process of creating our budget for the next fiscal year which begins April 1, 2014. The budget is a challenge every year but this year is more of a challenge than most.
Each year the cost of doing business increases because supply cost, personnel cost, contract cost and service costs all increase from one year to the next. What makes this year’s budget challenging is that although costs are increasing, revenue will be decreasing.
We are beginning to feel the effects of reductions in reimbursement from Medicare, Medicaid and other pay sources. Payment reductions as a result of the Affordable Care Act, sequestration and the transition of care from volume to value will result in about a $1 million dollar decrease in revenue next year for GVMH.
As you can imagine increasing costs and decreasing revenue don’t go hand in hand and all hospitals are struggling to identify ways to rein in cost. For us to meet the needs of the community and provide valuable services it’s important that we create a budget with some margin, otherwise we won’t be able to add and enhance needed services or keep pace with technology. If we neglect our responsibility to grow and improve services we will not be able to provide the quality care our community needs and deserves.
As challenging as this year’s budget is, it is only going to get harder as we move forward. The care delivery model is changing and more payment reductions are set to take effect in the coming years and I’m going to guess that the cost of doing business will not decrease at the same pace, if at all.
These are challenging and exciting times in health care. The face of health care as we know it is changing before our eyes and the only way GVMH, and all hospitals, will be successful is to change with it. If we continue “business as usual” we will struggle to provide the high level of care our community deserves and we may even struggle to remain viable.
We are in an environment where standing still is not an option and those who wait to react will get passed by those who are working to stay one step ahead of change. There’s opportunity for those who seek it and there will be consequences for those who don’t.
Many of you who read this blog on a regular basis are members of the GVMH Team. If you have ideas on how we can become more efficient and reduce cost, please let me know.