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Financial Viability: What You Need to Know



First let’s define “financial viability”.

Generally speaking, financial viability is nothing more than a hospital’s ability to generate and maintain an inflow of finance resources (revenue) that is greater than the outflow (expenses).

It’s not farfetched to believe that a hospital could be running in a highly effective and efficient manner, yet on the verge of a major financial problem in the near future.

Every hospital in the United States shares the same basic goal: to provide patients with the best possible service and care, 24 hours a day, 365 days a year.

A hospital must always keep an eye on its bottom line. When financial viability becomes a problem, patient care could begin to suffer.

Health Care Stats

When it comes to matters of financial viability and healthcare in general, there are many statistics that could change the way you look at things. Let’s examine several of the most important:

  • Cuts in Medicare payments to hospitals, as governed by the Balanced Budget Act of 1997, have led to serious financial issues at many organizations. (Advancing Health in America)
  • An Agency for Healthcare Research and Quality study showed that there were more than 38 million hospital stays in the United States during 2011. This was an increase of approximately 11 percent when compared to 1997. (Wikipedia)
  • Total health care spending in the United States is expected to reach nearly $5 trillion by 2021. This is an increase from $2.6 trillion in 2010. With this, health care spending will account for nearly one-fifth of the U.S. gross domestic product. (Aetna)

Although hospitals aren’t expected to dwell on these statistics, they prove that things are changing in the healthcare industry. As a result, this makes it more difficult to generate enough resources to pay all operational bills, while also having money leftover after all expenses are accounted for.

Major Contributing Factors

The healthcare industry has changed in many ways over the years. Hospitals that don’t keep up with the times often find that they are unable to remain competitive, both financially and with the type and quality of care provided.

Consider this: health care spending in 1970 was $75 billion. Now, by 2021, this number is expected to reach right around $5 trillion.

There are many contributing factors that all hospitals should be aware of, including:

  • Hospital cost increases
  • Provider prices
  • Medical technology
  • Waste
  • Unhealthy lifestyles
  • Aging population
  • Taxes

Hospitals can have a positive impact on some of these things, such as the use of medical technology, but other factors, such as unhealthy lifestyles, are more difficult to control.


Hospitals must always evaluate the financial viability of their organization, as this ensures that there is more money coming in than going out. Subsequently, patient care can remain at an all time high.

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