Key Takeaways

• Recent data points to a notable trend change with shrinking hospital margins.
  ‍
• Digital health advancements can help providers improve operating margins.
  ‍
• AI platforms can help bolster at-home care models, improve operational efficiency for care teams, and reduce appointment cancellations.
  ‍
• [WHITEPAPER] Take a deep dive into improving operational efficiency with digital health.

Medical professionals enter the field out of compassion and a drive to help people. But a functioning healthcare system that delivers on its goals to extend high-quality care to every patient can’t just run on empathy alone. It simply isn’t solvent without consistent revenue and streamlining operations. 

The last several years showed clear challenges in these areas.  Half of hospitals across the U.S. ended 2022 in the red. The year 2023 witnessed 14 rural hospital closures — mostly due to dwindling patient volumes, reimbursement issues, and surging operating costs. And while many providers have bounced back from record margin lows, many still face serious “cash on hand” issues.

Fortunately, technology advancements offer healthcare leaders significant opportunities for cost savings and increased revenues — many of which are emerging out of solutions centered on strengthening care delivery.

A quick overview of U.S. healthcare revenue

Before jumping into how digital health platforms can support ROI in healthcare, it’s important to contextualize where the industry stands today.

• Signs of growth after years of shaky margins: There’s no question that hospital revenues witnessed troubling trends over the past few years. However, it seems the pattern has started to change, with Kaufmann Hall reporting a significant margin increase in January 2024 relative to the same time in 2022 and 2021. 

• Continuing shifts toward alternative care models: The industry has been undergoing a gradual shift from fee-for-service models to value-based care for years, incentivizing healthcare providers to focus on outcomes rather than the volume of services rendered. According to the Centers for Medicare and Medicaid Services (CMS), accountable care organizations expanded by 3% in 2023 — and now serve nearly half of Original Medicare beneficiaries. Additionally, novel models of care delivery have seen an uptick since the pandemic — such as concierge medicine, which is slated to grow to over $39 billion in annual revenue by 2032. 

• Rising costs: Healthcare expenditure remains a significant concern, with costs outpacing inflation and putting pressure on stakeholders across the industry.  One study showed 89% of medical groups witnessed higher operating costs in 2023 vs. 2022, while another revealed non-labor expenses (purchased services, supplies, and drugs) specifically rose by 5.5% for this same period.

• Digital transformation spearheaded by healthcare AI investments: Increased adoption of digital health technologies — specifically healthcare AI — is reshaping revenue streams and improving efficiency in healthcare delivery. One survey found 90% of healthcare executives find digital health advancements have improved operational efficiency, lend credibility to their organizations, and reduce administrative tasks for care teams.

• Policy impact: Ongoing debates and changes in healthcare policy — including efforts to expand access, control costs, and address disparities — significantly influence revenue streams for providers and payors. And updated regulations are often rolled out to specific cohorts. For example, CMS announced a recent patient reported outcomes (PROs) collection mandate specifically for hospital outpatient departments (HOPDs) and ambulatory surgery centers (ASCs) that perform total hip and knee surgeries that came on the heels of similar rules announced for inpatient — standards that will eventually factor into Medicare reimbursements.

Three novel ways digital platforms can support ROI in healthcare

Every healthcare leader has heard of revenue cycle management — and advancements in this area are exciting within technology development. There’s no denying that AI programs that can crunch vast amounts of data with unprecedented speed will be vital for cutting costs and driving revenue. But apart from this segment of innovation, there are a variety of ways that digital health platforms offer providers tangible cost-saving and revenue-generating benefits through advancing care delivery itself. They include:

1. Advancing your at-home care model with intelligent care enablement

Much of healthcare is moving to the home setting. In 2023, 73% of healthcare executives reported prioritizing at-home care. In that same year, the global home health industry was valued at $390 billion, and is forecasted to grow by 7.96% by 2030.

One key contributor to this rapid growth is the cost savings providers can make when certain care-related activities are shifted from the hospital setting to the home — such as those generated from freeing up bed space. But what has enabled the expansion of at-home care as a sufficient alternative to a majorly inpatient model? Technology. 

Emerging advancements have made it possible for care teams to closely monitor their patients, receive and reply to messages, and automatically remind people of their upcoming doctor visits. But that’s just the tip of the iceberg. Extending automated clinical support to individuals through SMS, Memora Health’s intelligent care enablement platform uses conversational AI to understand care journey-related questions patients might have before, after, and between visits — and retrieves responses to concerns from a clinician-curated database to reliably answer them, as well as resources that can help people navigate care.

As a result, individuals receive the support they need outside of the hospital without having to wait on a response from a clinician. And, on the care team side, there are fewer incoming alerts and calls to answer, saving precious time that can be diverted to top-of-license care. Ultimately, this cuts down on time-consuming and costly tasks for hospital staff members — without sacrificing care quality for people healing at home.

In one SDOH Care Program, Memora saved staff an estimated 250 hours per month by automating data collection.

2. Using healthcare AI to reduce operational friction in existing care team workflows

In response to revenue issues, many hospitals have laid off sections of their workforce. Hospital staffing cuts were up 99% in 2023 over 2022. And, as of April 2024, over 20 hospitals and health systems announced more layoffs this year.

Indeed, shrinking the workforce might solve some revenue issues in the short term. But it doesn’t address a distinct problem staring providers in the face: operational inefficiency. As workers feel the strain from staffing gaps, they’ll still need to grapple with outdated systems, tedious workflows, and mounting administrative tasks. Without overhauling these aspects of delivering care, hospitals will see wasted productivity, poorer experiences for patients, and, ultimately, continued revenue issues.

In truth, conversational AI has been at the forefront of providing viable solutions for simplifying and streamlining workflows. For example, Epic unveiled an auto-draft feature that uses generative AI and aimed at helping clinicians answer inbox messages.  However, early results suggest that this application of AI has actually added more time to this workflow, as doctors have to review and revise these automated correspondences.

Memora’s platform has been developed with these pain points in mind. It actively answers patient questions for the care team using a retrieval-based AI model — instead of generative — that only responds within set parameters. This way, care teams and staff can feel confident patients are receiving the right information — and only need to step in when individuals have outlying concerns. This means less time supervising AI, and more time focusing on connecting with their patients.

73% of patient messages were managed solely by Memora's conversational AI in one fertility program. Find out how.

3. Reducing no-shows and cancellations

When it comes to hospital revenue, few indicators show positive growth like patient numbers. The math is simple. More individuals seeking care at your organization means more chargeable or reimbursable services.

However, actually realizing revenue from patient growth depends on ensuring people show up for their appointments. At a high level, one classic figure points to $150 billion in lost revenue across healthcare due to no-shows (this is most likely higher as of today).

To prevent costly cancellations, it’s first necessary to understand why they happen in the first place. Some barriers are related to social disparities — such as lack of transportation. But another common obstacle has to do with being unprepared for upcoming procedures or lacking health literacy to manage care journeys. 

Advanced platforms like Memora Health proactively reach out to patients with pre-appointment guidance, ensuring they’re prepared for their visits and understand exactly what steps to take prior to their procedures or screenings. Specifically, Memora uses conversational AI to also provide reactive assistance if people have questions before their visits. To effectively reach individuals, Memora uses SMS texting — a channel with a 98% open and response rate.

One large health system’s fertility program saw a 50% reduction in no-shows after using Memora Health.

As healthcare continues to crawl out of a revenue rough patch, understanding the benefits technology has to offer will be essential for discerning which advancements to adopt. Ultimately, a blended portfolio will be required to truly maximize cost savings while preserving . Thus, organizations will need to consider solutions for driving operational efficiency and supporting fundamental changes that will help yield more sustainable margins.

‍Find out more about how Memora Health can support your ROI by scheduling a demo.