American hospital crisis: Why are they struggling?

American hospital crisis: Why are they struggling?

In 2019, hospitals saw a hike in use following Medicaid expansion. By 2027, when Baby Boomers begin transitioning into Medicare coverage, government programs will pay 47% of American healthcare costs. Still, 1 in 5 hospitals are vulnerable to closure due to financial-related issues. Furthermore, the healthcare job market is desperate to fill 2.3 million positions – including nurses, lab techs, physicians, and surgeons by 2025. Overall, the primary contributors to the American hospital crisis boils down to improper supply chain management as waste amounts to 20% of total healthcare spending. All of this is before the coronavirus pandemic hit, now things will likely get even worse. So, hat can be done?

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In short, big data could save the American healthcare industry up to $450 billion per year. By utilizing big data, healthcare professionals will be able to eliminate waste, fraud, and abuse, improve their revenue and profit margins, use operational data to boost productivity, and analyze patient data to improve outcomes. In fact, the future of hospitals is said to revolve around data-based decision making.

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As of now, the most disregarded opportunities for reducing hospital management costs include automation, purchased services, and data entry. 78% of hospitals are still manually counting inventory, although use of artificial intelligence can help alleviate time spent on this, and just 17% monitor inventory with RFID tracking. Furthermore, up to 30% of hospital purchases don’t match their contracted pricing amount, and nearly 20% of nurses’ and doctors’ time is spent on managing these supplies and services.

Why Americans Are Facing A Hospital Crisis

In 2018, healthcare organizations managed 8.41 million gigabytes of data. As a result, 93% of healthcare executives are looking for a better approach to data entry and analytics. Additionally, hospitals could safely reduce supply chain expenses by approximately 18 percent without negatively affecting the quality of patient care distributed. Monetarily speaking, that’s $11 million in annual cost savings for each hospital.

Adopting supply chain efficiencies from other industries could save the American healthcare sector up to $130 billion, and by reducing waste, centralizing their supply departments, and optimizing with NHS, savings could be used to build 2 outpatient surgery centers, or fund the salaries for up to 160 registered nurses or 42 primary care physicians.

In 2019, American healthcare spending reached $3.8 trillion, and hospital expenditures accounted for one-third of total spending. In fact, revenues for nonprofit hospitals grew more slowly than expenses.

The future of healthcare relies in the hands of enhancing hospital supply chain management. By doing so, hospitals can save money, time and themselves. To read more about the American hospital crisis, check out the infographic below.

american hospital crisis

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Jacob Wolinsky is the founder of, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at) - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver
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