May 16 2023

3 Ways for Independent Hospitals to Achieve Cost Containment

Rural, independent and community hospitals face resource limitations. It’s important to implement cost-saving strategies supported by strong IT partnerships and federal funding.

Healthcare organizations are not exempt from the economic headwinds affecting many U.S. companies today. However, rural, independent and community hospitals are feeling the most pressure.

These facilities tend to serve an aging patient population that is more reliant on Medicare and Medicaid. Unfortunately, federal insurance programs often entail prolonged payment cycles for hospitals. The reimbursement rates from Medicare and Medicaid also are lower compared with other private health insurance companies. A challenging payer mix exacerbates the financial difficulties faced by these hospitals.

It’s not uncommon for an independent hospital to operate with less than 30 days’ cash on hand, and some, such as critical access hospitals, might even operate with less than 20 days’ cash on hand. In any other industry, that would be considered dangerous and disastrous for the business.

Protecting patient data and maintaining a modern IT infrastructure in the current environment can be a challenge.  However, there are strategies independent hospitals can adopt to achieve cost containment while maintaining a strong cybersecurity posture. Here are three examples.

Rural Healthcare Sidebar

1. Independent Hospitals Need Efficient IT Infrastructure 

Before implementing any new technologies, rural, independent and community hospitals should assess their existing IT assets to find areas where costs can be reduced or optimized. For example, the IT team can conduct telecom expense audits or electronic health record license audits to ensure they’re not overspending.

A technology partner such as CDW can help organizations identify opportunities to consolidate IT systems and applications. CDW offers a variety of assessments that can help independent hospitals identify opportunities to optimize their current environments, such as infrastructure, virtualization, threat protection, wireless and data center assessments, in addition to application rationalization. App rationalization involves identifying which applications should be kept, replaced, retired, consolidated or moved to the cloud.

Through these assessments and with the healthcare and IT expertise of CDW strategists, independent hospitals can prioritize their IT investments while reducing their overall risk. Rural, independent and community hospitals often operate on razor-thin margins, meaning they don’t have a lot of room for error. They can’t afford to make mistakes. CDW’s strategy team can help independent hospitals to allocate their IT investments appropriately.

DIVE DEEPER: Learn three benefits of clinical workflow solutions for rural healthcare.

A hybrid cloud strategy also can help independent hospitals create efficiencies within their budgets. Many organizations are still on-premises and haven’t begun their journey to the cloud. When looking for cost-saving opportunities, cloud-based solutions can help independent hospitals reduce costs by eliminating the need for expensive capital hardware purchases. A hybrid cloud strategy also reduces maintenance and upgrade costs associated with on-premises hardware.

In addition to IT infrastructure efficiencies, finding efficiencies through vendor consolidation can also help independent hospitals achieve cost containment. If a hospital leverages its spending with one provider, it is better able to negotiate volume discounts and rebates or participate in other enhanced customer programs.

If an independent hospital works with five or six different IT suppliers, there’s a cost associated with managing each of those relationships. In addition to cost inefficiencies, there are also soft costs to consider, such as the time spent coordinating with different vendors and potential interoperability challenges.

Click the banner to learn how a partner can help independent hospitals solve IT challenges.

2. Using Managed Services to Combat Staff Shortages

As rural, independent and community hospitals assess their IT infrastructure, execute cost-saving measures, and consider new solutions and strategies, it’s important to keep cybersecurity top of mind. A cyberattack not only threatens an independent hospital’s bottom line and puts patient data at risk but it also threatens the hospital’s brand reputation and patients’ trust.

While cybersecurity is critically important for independent hospitals, it can be difficult for their health IT teams to invest heavily in the staff, tools and strategies needed to protect the organization. That’s where managed services come in. With a managed services partner like CDW, an independent hospital can monitor its network traffic 24/7 without the hospital having to employ staff with the skills to perform the task.

Any investment in cybersecurity also can help to reduce the cost of cybersecurity insurance, which is a growing necessity in the industry due to an increase in attacks targeting healthcare.

Another benefit of managed services and a managed network monitoring system is that they free up an independent hospital’s IT staff to focus on other strategic tasks. It can be hard for rural, independent and community hospitals to find CISOs or skilled security engineers. By empowering a partner to manage security through a virtual CISO or other managed cybersecurity service, an independent hospital can take advantage of a great skill set that they might not have been able to find locally amid a shortage in IT and security experts.

It’s possible for independent hospitals to recruit from outside of their areas, but they are competing with large hospital systems who can likely offer in-house security experts larger salaries.

READ MORE: Find the right cloud solution for your independent, rural or community hospital.

3. Independent Hospitals Should Take Advantage of Federal Funding

Independent hospitals can leverage federal dollars to help pay for cybersecurity and IT infrastructure investments. During the pandemic, several one-time grants were made available to help offset costs associated with treating patients with COVID-19. Many of those dollars were set aside for IT investments, particularly telemedicine. While those grants are no longer available, there are still annual grants available to rural, independent and community hospitals.

Becoming knowledgeable about those programs can help diversify the hospital’s revenue stream on an ongoing basis. These grants include the Health Care Connect Fund from the Universal Service Administrative Co., the Distance Learning and Telemedicine grant program from U.S. Department of Agriculture Rural Development and the Small Rural Hospital Improvement Program from the Health Resources and Services Administration.

Many smaller hospitals that need federal funding and that are the intended recipients of these dollars don’t have grant writers on staff like larger hospital systems might. It can be helpful for independent hospitals to hire consultants to navigate the grant application process. While CDW doesn’t do grant writing or have any contractual relationships with grant writers, our strategists can point independent hospitals toward grant consultants who have been helpful to other customers.

Rural, independent and community hospitals don’t have to navigate today’s complex healthcare landscape alone. A strategic IT partner such as CDW can help them to achieve cost containment while protecting patient data so that they can focus on patient care.

This article is part of HealthTech’s MonITor blog series.


Illustration by Phillip Pignato; tutti-frutti (hands)/Getty Images

Learn from Your Peers

What can you glean about security from other IT pros? Check out new CDW research and insight from our experts.