Established in 1977, Krona Community Hospital is a 60-bed, acute care hospital located in the heart of Banconota County. With a staff of nearly 100 physicians and specialists, 400 employees and 75 volunteers, they offer a full range of health care services. They are accredited by The Joint Commission.
Nouveau Health, a private, not-for-profit health care chain, took over management Krona Hospital. Last year, state officials began to discuss Nouveau’s proposal to build a new, replacement hospital in Banconota County. The new facility would have 74 acute care beds, four observation rooms, four surgical operating rooms, one c-section room, a 24-hour emergency department, a maternity center, an intensive care unit, and an extensive outpatient center that will provide service such as diabetes treatment, physical therapy, speech pathology, and so forth.
You are a staff member in the finance department at Nouveau Health, whose sole responsibility is to advance the success of the organization through assisting in planning, forecasting, and finance management.
Primary Task Response: A wellness program includes services with exercise programs and chronic disease management to catch problems early so that a customer can be seen in urgent care or a doctor’s office instead of ending up in the hospital. It increases outpatient revenue and decreases inpatient admissions and readmissions thereby, hopefully, decreasing risk for financial loss. Familiarize yourself with an example of a wellness center at the following web site:
Based on Krona’s budget, consider the effects that a Wellness Program provides to Krona. If the wellness program is to include outpatient revenue, home health revenue, and pharmacy revenue, discuss how outpatient and inpatient revenue will differ with these budgetary goals. Include the following:
- What has to occur for inpatient revenue to increase?
- How do readmission rates affect inpatient revenue?
- How do outpatient services increase reimbursement in a Wellness Center?
- How can expenses be controlled to improve revenue?
Click here for last year’s budget And respond with 400-600 words.
Expert Solution Preview
Krona Community Hospital has been providing healthcare services since 1977. With the increasing demand for healthcare services, Nouveau Health proposed to build a new and improved facility in Banconota County. As a staff member in the finance department, my responsibility is to assist in planning, forecasting, and finance management to advance the success of the organization. In this assignment, I will discuss the effects that a wellness program provides to Krona, considering outpatient revenue, home health revenue, and pharmacy revenue, and how it can affect inpatient and outpatient revenue. I will also discuss what has to occur for inpatient revenue to increase, how readmission rates affect inpatient revenue, how outpatient services increase reimbursement in a Wellness Center, and how expenses can be controlled to improve revenue.
Effects of a Wellness Program on Krona’s Budget:
A wellness program aims to catch potential health problems early, thus reducing hospital visits and consequently inpatient admissions and readmissions. A wellness program includes services with exercise programs and chronic disease management. The website mentioned in the question explains the services provided by a wellness center. With the inclusion of an outpatient revenue, home health revenue, and pharmacy revenue, let’s analyze how it can affect Krona’s budget.
Firstly, inpatient and outpatient revenue will differ with these budgetary goals. Inpatient revenue will decrease with the inclusion of a wellness program as the program aims to reduce inpatient admissions and readmissions. The patients will be treated in outpatient centers, and the hospital will lose revenue from inpatient stays. Outpatient revenue, on the other hand, will increase as patients will be more involved in preventive care and will require chronic disease monitoring, exercise programs, and therapy sessions. With increasing outpatient services, patients will require fewer inpatient stays, reducing the hospital’s facility costs, which also increases outpatient reimbursement.
For inpatient revenue to increase, the hospital must maximize patient occupancy rate, increase the number of admissions, and provide efficient care. With a wellness program in place, patients will exercise good preventive measures, which will lead to fewer inpatient admissions. Additionally, readmissions play a pivotal role in the revenue generated by inpatient stays. If a patient is discharged too soon or without proper treatment, they may come back to the hospital with aggravated symptoms, resulting in readmissions. This leads to a decrease in revenue as the hospital may not receive full reimbursement for readmitted patients.
To increase outpatient reimbursement, the hospital must offer a more extensive range of outpatient services like physical therapy, speech pathology, and diabetes treatment. The wellness program offers such services that can increase outpatient reimbursement. The wellness program can generate revenue as it offers services that may not be covered by insurance or only partially covered. The pharmacy revenue can also be increased with the inclusion of the wellness program by offering preventive drugs, health supplements, and other such items.
Expenses can be controlled to improve revenue by introducing cost-cutting measures like outsourcing, downsizing, and reducing administrative expenses. The hospital can also adopt a preventative care model that focuses on reducing the number of hospital visits, which will lead to cost savings. The adopted model can be based on the patient’s health condition or age, which can help maximize revenue, reduce costs, and improve patient satisfaction.
In conclusion, a wellness program can have a significant impact on Krona’s budget. It can reduce inpatient admissions and readmissions, which may lead to a decrease in the inpatient revenue generated. However, outpatient revenue will increase with preventive care measures, including exercise programs, chronic disease management, and therapy sessions. Effective cost-cutting measures, pharmacy revenue, and expanding outpatient services can aid in increasing the revenue and improving Krona’s budget.