High overhead costs suggest which of the following issues?

High overhead costs often indicate underlying challenges within a healthcare practice. When there is low patient volume, the fixed costs of running the facility, such as rent, salaries, and utilities, become more burdensome for each patient treated. This situation can result in higher per-patient overhead costs, as these expenses are spread over fewer patients. Additionally, poorly managed care contracts can exacerbate this issue by limiting revenues and making it difficult for the practice to negotiate favorable terms, further impacting financial sustainability and service efficiency.

Understanding the relationship between patient volume and overhead is crucial for healthcare management. A facility with low patient volume may struggle to maintain high-quality operational standards and provide competitive care if expenses significantly outweigh income. This scenario leads to inefficiencies and challenges in maintaining the financial health of the organization, underscoring the importance of managing overhead costs effectively.