Denials cost the average hospital $3.5M, survey finds

Hospitals and health systems have shown improvement in revenue cycle performance since 2015, but they still face various challenges in this area, according to Advisory Board's latest revenue cycle survey.

The biennial survey included senior executives at 90 hospitals and health systems as well as data from nearly 300 additional healthcare organizations.

According to the survey, the number of denials hospitals wrote off as uncollectable increased by 90 percent compared to six years ago. This means a difference of $3.5 million for the average hospital with 350 beds, Advisory Board said.

The survey also found the average successful appeals rate for hospitals fell from 56 percent to 45 percent for commercial payers since 2015. For Medicaid, the average appeals success for hospitals fell from 51 percent to 41 percent over that time period.

"These challenges are likely to persist as an increasing number of denials are based on medical necessity rather than technical or demographic error," Advisory Board said.

Additionally, the survey found collections at the point of service for the average hospital have increased from $800,000 to nearly $3 million over the last six years. Advisory Board noted organizations that offer patients discounts for paying medical expenses in full upfront tend to collect a higher percentage at point of service than organizations that don't.

Read more about the survey here


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