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A Path Forward For Rural Hospitals And Healthcare Systems

Kevin MacDonald, CEO of Kit Check, the leader in med kit restocking automation and drug diversion detection software for hospitals.

It has been over a year since the World Health Organization (WHO) declared a global pandemic due to Covid-19. Both hospitals and healthcare systems across the country have been under unthinkable stress and strain ever since. In addition to an overwhelming influx of patients and overburdened staff, rural organizations, in particular, have been facing financial struggles because of several pandemic-related factors.

One step rural hospitals and healthcare systems can take to recover from the pandemic’s financial impacts is to ensure they are accurately and efficiently monitoring organizational spend using cutting-edge technology that is designed to increase savings and properly allocate funds for medications and supplies.

The Situation

As the pandemic continues to impact hospitals and healthcare systems across the United States, rural organizations are experiencing considerable strain due to industry-wide revenue shrinkage. This revenue decline is the direct result of restrictions on medical visits imposed due to Covid-19, as well as heightened, unexpected costs incurred by hospitals treating those infected by the virus.

Throughout 2020, many Americans chose to avoid or delay routine healthcare because of issues caused by the pandemic — overflowing hospitals, sudden unemployment and loss of insurance, commitment to staying at home and more — causing an estimated total loss of over $323.1 billion for hospitals over the entire year. This loss is compounded by the fact that total hospital expenses rose throughout the year due to extra costs associated with treating severely ill Covid-19 patients. Additionally, it’s estimated that hospitals could lose up to $122 billion in total revenue in 2021 because of the pandemic’s continued impact.

Implications For Rural Populations

According to the American Hospital Association’s 2019 Rural Report (its most recent report at the time of writing), around 20% of Americans live in rural areas and depend on hospitals as “important sources of care in their communities.” With the Covid-19 pandemic lowering hospital revenues while also increasing hospital costs, rural healthcare organizations are at heightened risk of shuttering due to financial strain, which would leave those rural populations without easy access to comprehensive healthcare services.

Research has found that poverty and health are closely linked, and the poverty rate in rural areas is higher than in urban areas. Additionally, those with low incomes are less likely to have health insurance, meaning they have to pay entirely out of pocket for any medical expenses. If hospitals in rural areas fail because of financial issues, those under the poverty line will be even more affected by these social determinants of health. Additionally, since many under the poverty line are responsible for all of their medical costs, it’s unlikely they’d be willing — or even able — to travel farther for medical care should their community hospital close; at that point, it may become easier to ignore any new or lingering medical issues.

It has never been more important to ensure rural patients have equal access to medical care, and administrators of rural hospitals and healthcare systems must act now to keep their doors open in the future.

Road To Recovery

In mid-March, President Biden signed a $1.9 trillion COVID-19 relief package that includes $8.5 billion in funding for rural hospitals. Additionally, the bill contains provisions meant to increase health insurance coverage across the country, especially among low-income and unemployed individuals. But this is only the beginning of the road to recovery for rural hospitals and healthcare systems.

In conjunction with the relief package, rural hospitals and healthcare systems can begin to overcome the pandemic’s financial impacts by implementing technology solutions that can help them account for drug spend and ensure that the appropriate quantities of each medication are being ordered. Being able to closely track these expenses, along with other spending on critical equipment such as personal protective equipment (PPE), is the key to ensuring that money is saved and budgets are adhered to, helping keep hospitals open for everyone who requires care.

Not only does technology like this help with budgeting, but it also helps ensure that hospital staff is equipped with the tools they need to track spend accurately, as manual financial processes are very prone to human error. With Covid-19 continuing to surge through certain areas of the country, the last thing hospital staff needs is to spend hours dealing with decentralized ordering portals and spending reports that may not even be accurate.

When it comes to implementing new technologies, it is imperative to consider the unique challenges and needs within a particular organization. Health systems should focus on costs and activities that are draining the most resources, as well as areas where resources can be shifted — so the right solutions can be adopted to ensure the most optimal budgeting plans.

Additionally, healthcare organizations should research current federal programs designed to provide financial assistance. For instance, certain hospitals and healthcare systems may be able to save money by purchasing discounted drugs through the 340B Drug Pricing Program. With this program, eligible organizations are able to stretch federal resources “as far as possible,” which helps to reach more patients who may lack access to healthcare services.

Though the Covid-19 pandemic has caused financial harm to hospitals and healthcare systems across the United States, organizations can take control of their budgets by implementing tech-driven solutions to track organizational spend accurately, as well as by considering federal programs that can help cut costs on essential items like drugs. By taking measures to keep hospital financials on track, closures can be avoided, and rural populations can have peace of mind that they’ll always be able to access comprehensive healthcare services easily.


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