Hospitals Are Spending More Than They Make. Communities Are Paying the Price.

“I have no idea what happened here, and now we’re in a position where I don’t think anyone can help us. We need to sell all seven hospitals, and we need to do it quickly.”

This comment was made by a board member and interim CEO of a community health system who faced a devastating but common reality: they were not collecting enough revenue to keep their facilities open and operating.

With nearly 900 hospitals at risk for closure today, healthcare deserts are becoming more prevalent across the U.S, especially in rural communities. The average distance between rural healthcare facilities has increased more than 700% since 2014 – with facilities now being more than 45 miles apart and only one ICU bed per 10,000 people on average.

The simple answer is that the math is not adding up. Operating expenses are up nearly 30% compared to last year, and inflation is at a 40-year high. These rising costs are far outpacing the reimbursement from commercial and government payors, which is only expected to increase by 2% 3% each year.

In addition to rising costs and stagnant revenue, hospitals are spending more money trying to collect what they owe – and are having a harder time doing it successfully. On average, 1 in 10 claims submitted for payment by a hospital is denied by a payor, causing cash flow issues, costly rework and lost revenue.

Adding to the complexity are the hundreds of thousands of regulatory updates and payor policy changes that occur each year, which hospitals are expected to translate and operationalize to avoid audits, fines or rescinded reimbursement.

While hospitals can’t control payor reimbursement rates, they can control the amount of owed revenue they’re collecting and at what cost.

At Ensemble Health Partners, our revenue cycle operators have partnered with more than 40 healthcare organizations to identify ways to improve financial performance and prevent loss. Through thorough revenue cycle assessments, we have uncovered more than $1 billion in uncollected revenue across those organizations.

Here are specific tips for healthcare leaders to avoid the biggest preventable issues impacting revenue:

1. Dig into denials – know the details. Make sure you accurately map and track denials instead of masking them as contractual write-offs. Once you know where your denials are coming from, deploy dedicated resources to properly monitor and appeal them. Engage clinical experts to increase your overturn rate, and train upstream teams on denial trends to prevent future issues.
2. Make sure everyone views unbilled management as a team sport. Ensuring claims go out accurately and on time is the responsibility of the entire revenue cycle team and requires collaborative management of the whole process. A registration error can lead to a coding edit, which can lead to system edits, all of which can delay a bill. Establish a multidisciplinary team to monitor all unbilled accounts, assign ownership for resolution, and track action items to accelerate revenue.
3. Equip your front-end staff to collect with empathy. Eighty percent of patients want their doctors to help them manage financial responsibilities by clearly communicating what insurance covers versus what they owe. Equip your patient access staff with scripts, job aids and software to adequately explain what patients can expect to owe, connect them with financial aid, set up payment plans, and collect patient out-of-pocket costs with empathy.
4. Automate your coding and charge audit, entirely. It would take a staff of roughly six dedicated, skilled auditors performing only chart reviews to validate the 40,000 individual codes associated with 5,000 monthly patient visits. Even if a hospital could staff this hypothetical team (which most can’t), human error would still be an issue. Leveraging technology to audit and validate 100% of codes and charges on each account eliminates human error and prevents the risk of missed revenue or liability for an overpayment.
5. Keeping communities healthy means keeping healthcare organizations healthy. Now more than ever, it is critical to ensure healthcare provider revenue is protected and human errors aren’t causing costly mistakes. Ensemble’s team of revenue cycle operators finds anywhere from 5% to 15% of net patient revenue missed due to inefficient process, outdated workflows, or insufficient expertise to identify and appeal payment discrepancies.

Learn more about how we are partnering with healthcare providers across the country to improve financial performance and keep communities healthy.

Shannon White, Chief Operating Officer of Ensemble Health Partners, is a senior revenue cycle operations and business development executive with over 25 years of healthcare experience and a proven history of building successful teams and implementing strategies that improve financial performance.

Ensemble Health Partners is a leading provider of technology-enabled revenue cycle management solutions for health systems, including hospitals and affiliated physician groups. Ensemble offers end-to-end revenue cycle outsourcing, patented technology and targeted revenue cycle management solutions to clients across the country.