How Physician Engagement Can Revitalize Struggling Hospitals

As published on LinkedIN by Hilton Hudson II,MD. CEO of HPC International Inc.

In 2024, as many as 40% of hospitals were operating at a loss, according to Kaufman Hall, and the gap between the most and least profitable providers continues to widen. These hospitals often deal with outdated infrastructure, which increases maintenance costs and hinders efficient operations. Additionally, they face staffing shortages and increased labor costs, making it difficult to provide quality care. Declining patient volumes due to competition and reimbursement challenges from insurers exacerbate their financial strain.

Reversing financial losses will require innovative strategies for both growth and cost reduction.

The Role of Physician Engagement

While these challenges are often seen as the responsibility of hospital executives, physician engagement plays a crucial role in every hospital or health system’s financial health. Historically, medical schools have not emphasized the bottom-line financial implications of treatments, therapies, and surgical procedures. However, this knowledge has become essential as hospitals and health systems work to control costs.

That’s where physician advisors (PAs) come into play. PAs have played a major role in bridging the gap between clinical practice and executive decision-making. As liaisons between physicians and the C-suite, PAs help ensure that every medical order is clinically appropriate and cost-effective.

PAs are often the first line of defense in ensuring the treatments being ordered are appropriate. Many PAs come from specialty fields, equipping them with the clinical expertise to communicate effectively with administrators and medical staff. Their background—often supplemented with an MPH or MBA in healthcare administration—enables them to translate complex medical decisions into financial insights that both parties understand to support a hospital’s bottom line.

By advocating for evidence-based decision-making, PAs help physicians balance clinical judgment with financial sustainability. Their role is particularly crucial in preventing friction between practitioners and administrators, either with a hospital or from a health insurance provider, who may lack direct clinical experience or is unsure of the practitioner’s priorities.

Conclusion

Ultimately, helping doctors understand what tests or treatments to order and why they are medically and financially justified is essential to restoring a struggling hospital’s profitability. This approach ensures that medical decisions are clinically appropriate and cost-effective, improving patient outcomes and financial stability. By aligning care with patient needs and hospital resources, doctors can contribute to a more sustainable healthcare system.