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Three lessons from recent rural Texas hospital closings

Over twenty rural Texas hospitals have closed in recent years. The most recent to join this growing number of closures is a hospital that operated in the state since 1949.

Why the large number of closures?

Hospital executives state the most recent closure is the result of decreased admissions and increased competition. Other issues include decreased reimbursements from Medicare, Medicaid and other insurance providers.

How can other hospitals increase revenue?

In order to survive, hospitals must increase profitability. There are many strategies that can help. Three examples include:

  • Reevaluate staffing needs. A hospital’s largest expense is generally its staff. Review data and adjust as needed. In some cases, adjusting staffing demands based on day to day needs, as opposed to month to month needs, can result in a more efficient operation. This may require a more flexible staffing arrangement, potentially relying upon a large number of hourly or contractual employees instead of full time workers.
  • Review operating room schedules. Operating rooms (ORs) are generally scheduled on a block system. Review these schedules to ensure each physician is using their whole blocked time. If not, make changes to the OR schedule to better ensure efficient use.
  • Consider third party vendors. In some cases, it can be wise to outsource services like laundry or food needs.

Hospitals may also find themselves struggling to defend against allegations of false claims or overbilling. Such allegations can result in a federal investigation. In these cases, it is wise to seek legal counsel to better ensure the interests of the hospital are protected throughout the investigation.

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