Avoid Rural Hospital Closure and Forge a Path to Financial Success

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Understand the red flags of insolvency in healthcare

Financial security in today’s ever-changing healthcare landscape may seem like a too-distant promised land for many non-urban hospitals and health systems. While avoiding challenges altogether is unrealistic, knowing what red flags to watch out for can help your organization stay on a more stable financial path and could, with the right strategies in place, help turn potentially negative situations around. Let’s examine the four most common factors that lead to insolvency and rural hospital closure to gain an understanding of what it takes to succeed in healthcare today.

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The 4 most common factors that lead to insolvency and rural hospital closure to gain an understanding of what it takes to succeed in healthcare today:

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MARKET DYNAMICS

  • A sudden downturn in the local or regional economy
  • Significant competitive issues
  • Activities within the local provider community

STRATEGIC ISSUES

  • Reluctance to walk away from a failing strategy
  • Trying to be too many things to too many people
  • A good strategy, which failed
  • Lack of a data-based, adaptive business plan

IT SYSTEM CONVERSION

  • Unpreparedness for cash disruption
  • Poor conversion planning or oversight
  • Insufficient staff education

DEBT

  • Over-leveraging, often with non-conventional debt
  • Relying upon unrealistically optimistic projections
  • “Build it, and they will come”