As hospital finance execs work to navigate pricing pressures, transitions in patient coverage and new competitors, The Advisory Board said leaders are facing several mandates to change or risk losing a lot of money.
First, increasing point-of-service collections can have a tremendous impact. Patients are bearing an ever-increasing share of their care cost, so strong point-of-service collection practices are key to maximizing revenue. Community hospitals in non-Medicaid expansion states are seeing an average of $500,000 in additional bad debt, the Advisory Board said.
Improving clinical documentation can have a huge effect as well. Insurers and patients are seeing more and more of health systems' quality data, so to remain competitive, they need to make sure it's accurate. A 250-bed hospital can expect to lose $13 million annually by 2020 because of inaccurate and incomplete documentation.
[Also: Healthcare providers must weigh high value vs. high prices, revenue cycle pros say]
The next recommendation is difficult to implement, but it's worth the effort: Health organizations should make sure they're ready to share risk. A lot of providers are entering into shared savings contracts with public and commercial payers. Those contracts won't generate additional revenue in the near term for most providers, but the Affordable Care Act is driving the industry toward risk. The Advisory Board expects 75 percent of providers expect to implement total cost-of-care contracts by 2017.
Slightly less impactful, but still important, are price services for a consumer market. High deductibles are making patients sensitive to price, and their provider choices now include low-cost retail vendors. Strategic pricing is essential to compete, since the cost of losing one case per week is estimated to be about $400,000.
[Also: Intermountain revenue cycle VP: Hospitals are on the hook for price transparency]
It's also important to update supply cost strategy, the group said. A lot of hospitals depend on relationships with group purchasing organizations to get the best prices on supplies, but recent research has shown that GPOs have limited influence. Too much focus on price might cause an organization to miss other opportunities.
Another tip: Centralizing finance functions strategically. A growing business needs to decide which revenue cycle functions to centralize and which to manage separately. In 2014, 75 percent of newly-hired physicians were employed by hospitals.
Like Healthcare Finance on Facebook
Also worthy of consideration is care standardization. Its cost impact isn't consistent, so any organization should analyze utilization and cost data to understand where standardization will decrease costs, the group said.
Finally, the Advisory Board suggests revising charity care policies. Health insurance expansion equals less charity care under current policies, which reduces the benefit to the community and can affect a company's tax-exempt status. Roughly 85 percent of community benefit spending comes from charity care.
Twitter: @JELagasse