Today’s hospitals and health systems have focused on controlling costs for some time now. Decreasing reimbursement and fluctuating patient volumes continually make growing net patient revenue a challenge for hospitals nationwide. In fact, according to Harvard Business Review, since the beginning of 2016, the financial performance of many leading U.S. hospitals and health systems has significantly worsened.
For example, MD Anderson Cancer Center lost $266 million on operations in Fiscal Year (FY) 2016 and another $170 million in the first months of FY 2017. Prestigious Partners HealthCare in Boston lost $108 million on operations in FY 2016, its second operating loss in four years. And, The Cleveland Clinic suffered a 71 percent decline in its operating income in FY 2016. Unfortunately, these hospitals are not alone.
While growing net patient revenue takes a full-pronged approach, a key piece of the puzzle is improving payer yields through managed care and revenue cycle performance. When finances are tight, a common error is adding a service line to try and boost volumes. With the right approach, hospitals can realize more than two percent growth in net revenue without adding service line costs.
Below are some strategies hospitals and health systems can implement to grow net patient revenue.
Hospitals must evaluate and identify opportunities for improvements with payer contracts, marketplace trends, payer performance and service line payer yield performance. During this evaluation process, hospitals can also pinpoint denial contributors, underpayment exposure and market pricing comparison to design the right revenue cycle improvement initiatives.
2. Identify Gaps
A plan should be formulated to address any discrepancies found. After identifying the gaps, hospitals should:
- Analyze operational workflows
- Investigate and upgrade revenue cycle management process
- Develop a payer relation strategy
- Evaluate and implement a market and service line structure
- Optimize technology structure
3. Hardwire Daily Operations
Establishing a strategy and timeline for contract negotiations is imperative for maximizing revenue. This is particularly important with new payment methodologies and policies introduced by payers during negotiations. Another part of hardwiring daily operations is including alternative payment options for additional revenue opportunities.
With hospitals and health systems across the country facing financial challenges like decreasing reimbursement and fluctuating patient volumes, it can seem impossible to continuously grow net patient revenue. To optimize revenue without adding more service lines, hospitals should identify and mitigate risks while improving ongoing payer relationships and contract performance. With the right program in place, your hospital can capture the right charges, with the right codes, for the right patients.
Read more about QHR's approach to improving Payer Yield here.