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Maintaining the Sustainability of Acute Care Hospitals

Acute care hospitals are essential to today’s world, providing a safe haven for those who are injured or who find themselves suddenly ill. In recent years, keeping such hospitals profitable has posed a challenge.

Students in The University of Scranton’s Master of Health Administration online program learn the ins and outs of healthcare financial management, which gives them the tools to consider costs and budgetary controls needed to thrive in this changing industry.

Considering privatization

Privatization has moved to the forefront of for hospital decision makers. Mounting costs are even causing healthcare leaders to consider the idea of hospital privatization as a way of cutting back on escalating spending.

While institutions in the public sector are run by the government, those in the private sector are individually owned. The idea behind privatization is that with competition, better products and services emerge, prices fall and mismanagement declines – the whole system becomes more efficient. However, the counter-argument to this is that facilities need to be in the public sector to ensure that everyone has access to healthcare.

With privatization comes concerns about public health, and that the most vulnerable, such as the uninsured, will not receive needed services.

There are, of course, cost concerns to deal with. Approximately 31 percent of health spending in the United States goes to hospital services, and costs may soon rise, points out Michael M. Costello, MBA, JD, in his article, “Maintaining sustainability of acute care hospitals.” Still, even as costs escalate, revenues continue falling, squeezing profit margins and sometimes forcing hospital closures or mergers. In certain locations, however, keeping such hospitals open can be essential to those who would otherwise be without reasonable access to needed acute care.

Concerns about hospital closures

When it comes to emergency situations, such as accidents or heart attacks, the amount of time it takes to reach the nearest hospital can be a pivotal factor in keeping mortality rates down in urban areas. Rural hospitals, however, tend to be at highest risk for closure. Here, in addition to increased travel times to hospitals causing health issues particularly for vulnerable patients such as the elderly, there can be economic implications for hospital closures as well. Unemployment rates in rural communities can rise by as many as 6 percent and average per-person income likewise plummets with hospital closures.

Healthcare leaders, including Costello, are considering what the role of the government should be in ensuring that acute hospital services remain available.

Costello views it as akin to how the U.S. government stepped in during the 2007 financial crisis to help bail out large financial institutions, such as when the government purchased 79 percent of the stock for the international insurance firm AIG to keep it from failing and possibly dragging world financial markets further down with it.

Costello is among those who wonder whether government intervention in hospitals could allow them to remain open in areas so that needed access is retained.

Understanding the intricacies of government’s role in preventing hospital closures and learning to face the complex challenges of issues such as privatization are some of what The University of Scranton’s Master of Health Administration program offers students the opportunity to learn about in depth. To find out more about this CAHME-accredited online program, request information and speak with a Program Manager.