Not-for-profit health systems are facing a critical period characterized by secular headwinds that pose a threat to their mission of providing accessible, equitable, and quality care for all individuals, regardless of their ability to pay. One major challenge is the shift from commercial to government payment models, as public reimbursement fails to cover costs, leading to financial instability. The increasing reliance on government-funded health coverage further exacerbates this issue.
Another significant trend is the shift from inpatient to outpatient care. While this transition aligns with patient preferences and has the potential for cost reductions, it reduces the financial stability of not-for-profit health systems. High-margin inpatient procedures have historically offset the costs of less-profitable but essential services. However, as outpatient services grow, the potential for offsetting revenue diminishes, placing additional strain on financial health.
Technology also presents a challenge, as the increasing costs and rapid obsolescence of medical technologies make it difficult for not-for-profit health systems to keep up. While these technologies advance patient care and outcomes, the constant need to invest in the latest technologies puts financial pressure on health systems.
Competition from non-traditional healthcare providers, such as retailers and private equity-backed ventures, adds to the challenges faced by not-for-profit health systems. These entities often cherry-pick profitable sectors, leaving not-for-profit systems with the responsibility of providing less profitable but essential services, reports Express Healthcare Management.
Not-for-profit health systems are also burdened with the expectation of being the 24/7/365 safety net for the community. This responsibility comes at a significant cost, both financially and operationally, but is essential to their mission. Read more.
