healthcare revenue management

healthcare revenue management

Optimizing Healthcare Revenue Management: Strategies and Best Practices

1. Introduction to Healthcare Revenue Management

In the current healthcare climate, many physician practices and hospitals have focused extensively on cost control. However, those sound fiscal decisions may not support longer-term strategic growth objectives. With reimbursements continuing to decline, healthcare providers must look more carefully at the revenue they do earn in order to offset the reductions elsewhere. These physicians are leaving an average of 15 percent of potential revenue on the table by not collecting what payers owe for services rendered. Even the administrative costs, $16 billion a year, are sizable.

In the constantly evolving healthcare industry, declining margins have made revamping of revenue management processes a necessity. This paper presents a review of current healthcare revenue management strategies and their strengths and weaknesses. Despite a multitude of technical solutions, this paper argues that best-practice user-defined rules not only enable existing systems to greatly enhance the quality of their decisions but also are significantly less costly to implement. The proliferating national discourse on revenue management indicates a growing desire nationally to address and improve health outcomes, increase transparency, and reduce costs. An optimized revenue management system would allow a hospital or physician practice to address many of these national objectives and increase its own revenues.

2. Challenges in Healthcare Revenue Management

In addition, the complications of clinical power relations and how substantial clinically oriented software applications can become cause potential revenue management systems users to become anxious and uneasy about data needs, software design issues, the temporal dimension associated with patient processes, and the incentive effects of the provision of cash benefits. This challenge makes it difficult for hospitals and insurers, public and private, to develop long-range plans to manage the increasing costs of care and outputs from these new software systems. To accurately estimate health services’ costs and patient price structures, to assess the financial legitimacy of the cost estimates, and to encourage bureaucratic oversight of this industry, specialized software systems are required.

The first challenge in healthcare revenue management is accurate estimation of patient costs and price structures for many different procedures, treatments, and care options. This is particularly true with the wide variation in these estimates in a single institution or geographic market because of proprietary cost structures and utilization levels, the effects of specialists and surgeons on a patient’s treatment and recovery from a visit, and variations in the health status of admitted patients. The cost of incorrect estimates by service and cost structures can lead to revenue losses or excessive setting of patient balances owed at admissions.

The healthcare industry presents many challenges to revenue management processes. These challenges are due to the complexity of the healthcare system itself, the wide range of available treatments and service options, and the mix of patients with diverse financial situations. Here we will point out some issues that are particularly relevant to today’s market, and we will consider in detail some of them later on in the chapter.

3. Best Practices and Strategies for Maximizing Revenue

Monitor the competency building. Engaging management to support actions has involved multiplying the sources of understanding and integrating data from multiple sources, typically hosted by various organizations. Do not establish separate units reporting to separate executives, pursuing different ends. Meet at every performance review meeting to integrate progress, to form alliances, and to build continuous improvement through a “negotiation” type of discussion. Form a circle in support of understanding and changing individual resource management.

And feel responsibility for cost. Today, finance is active in planning and providing models to track progress toward NEHIPs. Support the decisions purchased by finance with data, infographics, and the tools you maintain. Support the teams as they learn how to think and act like business people. Senior management has been unequivocal about the decisions required to improve the performance of the American healthcare system.

Gain understanding of true resource consumption. Determine service cost transparency in a modern hospital. Service costs and the patient levels to which they are applied have been developed through the efforts of accounting and finance departments. Most of the hospital leadership treats these series as God-given, monolithic objects. Their final numbers pop out of the billing system in a timely fashion and are recorded as revenue cost numbers in the GL. Volumes are obtained from the electronic systems. In-depth understanding of the complexities of these processes is not present.

Empowering relevant decision-makers. Business intelligence is for everyone who needs to know. The information and tools needed for understanding resource consumption are in the hands of the people who use or produce those resources. It is often a showstopper when members of the ordering team or supply management leadership need to make changes to processes. The required information is not available, or tools have not been made available, or the data is not trustworthy. Healthcare is a team sport. The coastal mountain range of the 21st century hospital will be about efficient resource management.

By following the best practices found in the case study, “The Seven Myths of Healthcare-Finance Executive Control,” as well as other proven strategies, healthcare finance executives can ensure they are meeting their NEHIPs or other goals. Some of those strategies include the following:

4. Technological Innovations in Healthcare Revenue Management

In terms of revenue cycle management, several functionalities can be found in different systems, from billing and collections systems to business intelligence, reporting and scorecarding systems, to sophisticated revenue cycle management systems—which consolidate many functionalities needed along the revenue cycle management process chain. This topic is therefore relevant for today’s RMP applications, in particular since ongoing technological advances provide new capabilities in information technology and knowledge management. Orienting research towards new healthcare challenges, such as personalized medicine, health assurance, new patient services, or ways to obtain resources for funding complex therapeutic interventions currently available.

The healthcare industry is a pioneer in adopting revenue management strategies and technologies in the day-to-day management of internal processes. However, revenue management practices in healthcare are not widespread and are not fully leveraged. Some reasons for that are the specific aspects of healthcare services, the complexities involved, and the lack of a holistic approach in providing revenue management services. Nevertheless, many technology providers have been trying to cover this gap through the development of various software solutions. There is a great variety of options in the market, where solutions vary in scope and depth and can be seen as point solutions or be included in larger health information systems.