How to Increase Hospital Revenue
How to Increase Hospital Revenue
When the recession hit its peak a decade ago, hospital executives repeatedly cut costs to compensate for the financial backlash within the healthcare system. That is, until recently. According to the most recent Advisory Board survey of 90 C-level hospital executives, revenue-building has overtaken all other strategies in the last two years, and with good reason. All the cost-cutting in the world isn’t effective without revenue streams to match the increasing costs of providing care, and health system CEOs are taking action, focusing on improving ambulatory access, minimizing clinical variation, boosting primary care alignment, and adapting to healthcare consumerism.
In many ways, traditional hospitals took the biggest hit in the healthcare industry because many physicians left the hospital system, often to form competing practices that offer better payment options for patients, while collecting payments that reach 82% above cost, according to the Advisory Board study.
Hospital executives are recognizing that for them to bounce back, they need to find a way to attract physicians because they are the key to generating cash flow. According to the physician search firm Merrit Hawkins, doctors generated an average of $2.38 million each for their affiliated hospitals in 2018, which is a 52% increase since their last survey in 2016.
Hospital executives are also recognizing that diversifying revenue streams through new care services is the best way to bring physicians back to hospitals. Between January and March of 2018, 57% of executives ranked improving ambulatory services as their primary focus. With this diversification also comes a new kind of revenue management, especially when it comes to patient billing.
The bottom line is, hospitals have realized that their systems are outdated. Healthcare is now driven by health plans and government payers seeking the lowest-cost sites of care, and patients are responsible for more of their healthcare costs. As patients are burdened with more cost, there is a higher demand for customer service. Patients also require more options for payment, especially when the average out-of-pocket cost for insured patients is $5300. With these new demands, hospitals are scrambling to reorganize and rethink the fundamental ways they do business.
Steps to Better Revenue
So how are hospitals reorganizing their systems to attract more physicians and increase their revenue streams? Here are a few ways:
- They are expanding access to affordable, accessible, quality, and cost-effective primary health care services through satellite locations affiliated with the hospital (or primary care access points), especially in underprivileged and underserved communities.
- They are increasing the opportunity for a stronger doctor-patient relationship. This includes doing what’s in the best interest of patients and avoiding additional, unnecessary testing that is in conflict with patients’ financial best interests.
- They are minimizing staff hours associated with billing and redirecting their focus to customer service and patient management.
- They are increasing their billing technology to include more ways for patients to pay their bills and offer more flexible and budget-friendly payment plans. This also includes offering up-front pricing for health services before or during the time of a patient’s visit.
The marketplace now demands a new model of healthcare. For hospitals, it means bringing physicians back into the fold as collaborators and employees of hospitals and getting back to the basics of the mission of hospitals, doctors, and health care as a whole: serving the patient as a consumer and addressing the issues they are interested in, like cost of care based on illness, increased methods of communication and payment options, and overall customer service.