Economic recessions have been present for decades and are incredibly unpredictable, as they can hinder any organization or industry. Recession primarily affects those healthcare providers previously exposed to financial challenges, indicating service reductions and care quality declines. However, the negative impacts of recession can be minimized with a right-developed policy. Key performance indicators analysis has been the most beneficial in sustaining organizational goals, while the valuation processes require improvement.
The recession has significantly impacted every segment of the US economy, including health care. Furthermore, healthcare facilities that play an essential role in the welfare system may face greater financial difficulties as more people lose their jobs and health insurance coverage. In either case, hospitals that are initially financially restrained may become far more unstable than they were prior to the recession. One of the most notable impacts was the 2007-2008 financial crisis, which directly affected a large portion of the healthcare industry. National data show that medical service expenses were growing at historically low ratios between 2007 and 2010. Moreover, their net revenue from all channels divided by total revenues dropped from a sector average of 6% in 2007 to 1.8 % in 2008 (Foroughi et al., 2022). Various far-reaching factors may influence the impact of recession-related monetary losses on health care facilities.
The poor financial well-being of a hospital may result in service reductions and a negative impact on care quality. In addition, ongoing financial difficulties may jeopardize a hospital’s ability to meet new management challenges, such as value-based buying measures and improvement in the standard for delivery mechanism. Hospitals require financial resources to assist in the advancement of their health data technology, the implementation of new clinical models such as accountable care organizations (ACOs), and the assets to supervise economic risk.
It is possible to address an industry’s economic challenges. Taking on the difficulties entails implementing appropriate policies to strengthen hospital resilience in the economic downturn. Practical approaches include gross margin return on investment (GMROI), an inventory analysis indicating the ability to turn assets into profit, and others. The industry should generally strive to lower costs and enhance efficiency in all aspects of resilience (Foroughi et al., 2022). A healthcare facility resilient to the economic crisis implements policies to minimize costs and improve efficiency without interfering with hospital performance in significant components, such as service delivery, financing, and staff management.
The components of a financial plan can vary within a specific industry. For instance, key performance indicators are tied to a company’s strategic objectives and largely depend on the type of company and industry. The components of a financial plan should be determined using industry standards, consumer research, and market analysis, as well as the strategic incentives of a business organization, which should be taken into account.
I found that teaching about key performance indicators for financial growth was the most beneficial. A key performance indicator, or KPI, is a measurable metric to track progress toward a specific policy objective. When used to sustain overall organizational goals, the best KPIs serve as clear objectives or points to achieve (Hirayama & Nagasaka, 2017). It provided me with a fundamental understanding and knowledge of gross margin, contribution margin, return on investment, and employee productivity measures, which I am able to implement into my working practice. My area of improvement would be the valuation process. I believe that more research and material on this subject are required. I lack practical skills and knowledge in fundamental analysis, frequently used in valuation, and several other methods such as the capital asset pricing model and the dividend discount model.
Economic and Market conditions are the variables directly influencing industries and businesses. Poor economic conditions facilitate hospitals’ challenges, resulting in severe total revenue drops. It is crucial to adopt suitable policies and financial planning for sustaining industries. Furthermore, incorporating KPIs is highly beneficial for achieving strategic goals and considering them when developing a financial plan.
References
Foroughi, Z., Ebrahimi, P., Aryankhesal, A., Maleki, M., & Yazdani, S. (2022). Hospitals during economic crisis: a systematic review based on resilience system capacities framework. BMC Health Services Research, 22(1). Web.
Hirayama, K., & Nagasaka, Y. (2017). An application of the most effective KPI in business management—Development and application of KPI pool. HOLISTIC BUSINESS PROCESS MANAGEMENT: Theory and Practice (pp. 37-55).