Hospital Profitability Depends on Revenue Recovery

Jim Bohnsack, Chief Revenue and Strategy Officer, TransUnion Healthcare - Print  | 

Jim Bohnsack, Chief Revenue and Strategy Officer at TransUnion Healthcare shares his insights on some of the difficulties that hospitals are facing and ways that making the most of reimbursement opportunities can help hospitals conquer those challenges.

Today, hospitals face mounting challenges when it comes to attaining profitability or even breaking even. There are many obstacles to a hospital’s ability to recover revenue, one of which is the change in payer responsibility. With the increase of high-deductible health plans, patients’ out-of-pocket payments have risen sharply. Up to 30% of a hospital’s total net revenue comes directly from patients. And while the percentage of U.S. adults without insurance has gone down since passage of the Affordable Care Act (ACA), the number of uninsured individuals rose by .5% — 1.9 million — from 2017 to 2018. This increase helps represents how it’s even harder for hospitals to collect payment for services rendered.

A hospital’s profitability is also impacted by healthcare insurance companies becoming more stringent with denials, as updates to medical necessity and authorization rules are made. In addition, the complexity of and frequent changes to government reimbursements make it difficult to recoup revenues. Collectively, these factors play a significant role in negatively impacting a hospital’s financial viability and create a climate challenging to their mission of providing quality patient care.

With so many changing dynamics, revenue cycle management can be a challenge. When it comes to maximized reimbursements, it’s often not enough to have internal teams try to manage this process alone. While most hospitals have staff in place to find additional payment opportunities, it can be a highly manual, time-consuming process; one fraught with mistakes. In fact, one in four claims have missed charges or aren’t paid properly. By focusing solely on costs, the average 350-bed hospital stands to lose up to $22 million in revenue capture opportunities. 

Holistic approach to maximize reimbursements

While hospitals are well-versed in patient care, they may need additional resources and access to revenue recovery solutions to better systematize their back-end processes and maximize reimbursement efforts. Access to robust data sources and automating manual processes can significantly help streamline a hospital’s collection efforts and ensure maximum reimbursements. The importance of robust data and automation cannot be understated. 

With the right holistic strategies in place, hospitals and health systems stand to recoup tens of millions of dollars on an annual basis. Doing so requires evaluating various revenue recovery processes, including identifying hard-to-find insurance coverage, understanding the impact of denials/underpayments by insurers, and attaining government reimbursements more quickly and accurately. 

Beyond self-pay: Recognizing additional insurance discovery opportunities 

Revenue leakage occurs for many reasons — from eligibility challenges in the ER to incomplete or inaccurate patient demographic information, unverified primary payer, unnoticed retroactive Medicaid eligibility and resource constraints tied to post-service follow up. 

Finding all available insurance coverage can be a challenge. The most logical starting point is to look at self-pay accounts. Some 60% of missed coverage comes from patients who present without insurance or don’t disclose any potential insurance coverage at the point-of-service. In fact, 1–5% of self-pay accounts written off as bad debt actually have billable insurance unknown to the provider. 

While self-pay patients generate a large percent of missed coverage, it’s important to examine a hospital’s entire set of accounts — and not everyone does this. According to a recent TransUnion Healthcare survey, 75% of hospitals and health systems stop looking for coverage after finding one payer.

Up to an additional 0.5% of revenue can be found by identifying potential coordination of benefits opportunities and Medicaid secondary coverage. In 2018, 30% of revenue recovered by TransUnion Healthcare clients came from non-self-pay accounts, equating to over $800 million that would have been otherwise missed.

Maximize complex government recoveries

According to the American Hospital Association, in 2017, hospitals were underpaid $76.8 billion by Medicare and Medicaid. Reimbursement and revenue cycle leaders have an opportunity to improve their collections, but the complexities associated with government reimbursements can make it challenging. Some difficulties stem from the fact that reporting crosses many budget periods and comes from multiple sources, and the rules regulating processes and reporting are ever-changing. 

Government entities are responsible for paying providers for certain services rendered, but it takes considerable resources to collect what’s owed. Internal teams aren’t able to manually process all accounts, so relying on this resource alone won’t yield maximum recoveries. 

Automation and software tools can increase efficiencies and help on a number of key fronts, such as: identifying Transfer DRG underpayments; accurately determining eligible Medicare bad debt; maximizing Medicare DSH payments; and recovering reimbursements on accident claims. The right data and analytics can improve efficiencies and find more revenue quickly. Using solutions like Medicare Cost Reporting and Payment Integrity can help ensure earned revenue from government entities gets paid. As an example, TransUnion Healthcare was able to recover $2.1 million from underpaid Medicare claims over a five-year period for a Midwestern healthcare provider organization. 

Optimize processes: A/R recovery and denial management

Hospitals and health systems remain challenged — whether they utilize in-house staff or an outsourcing vendor — with denials and underpayments continuing to increase, and unpaid claims remaining unworked. With a lack of visibility into what’s driving A/R and how to improve future A/R performance, they’re collecting less and spending more money than they should. 

There are a number of reasons why industry-standard A/R recovery and denial management processes aren’t as efficient and effective as they should be. For example, internal teams are manually piecing together claim information from multiple data sources, and in some cases, multiple staffers are researching and trying to resolve the same issues. Traditional processes can often fail to identify systematic root causes of denials and underpayments, allowing those issues to persist and grow.

According to Health Business Insights, the majority of denials are recoverable and preventable — a typical hospital can recover between $5 to $10 million by addressing the issue. By leveraging accounts receivable recovery and denials management software, hospitals can gain accurate visibility into their A/R, identify and prevent denials. In addition, they can discover their root cause by looking at legacy, aged, small balance, underpayments, zero balance and workers compensation accounts. This can lead to uncovering reimbursement and variances resulting from underpayments and denials for each claim — including primary, secondary, interim and repeat visits. Using automation can help reduce and prevent denials and underpayments, maximize reimbursement from insurance payers and significantly help increase staff efficiencies. 

Making the most out of reimbursement opportunities

Tracking and recouping earned revenue from previously unknown payment sources puts hospitals in a better financial position, enabling them to continue to deliver care to their communities. Hospitals can stand to recover millions of dollars otherwise left on the table by implementing insurance discovery, A/R recovery and denial management, and government reimbursement optimization tools. Ensuring quality patient healthcare — a hospital’s number one responsibility — is ultimately dependent on its ability to maintain a healthy bottom line.

About the Author

James C. (Jim) Bohnsack serves as Chief Revenue and Strategy Officer for TransUnion Healthcare.  In his role, Jim focuses on partnering with healthcare organizations to improve outcomes through data decisioning and technology solutions. As a lifelong healthcare leader, Jim believes in leveraging “Information for Good®” and is passionate about any opportunity to improve the healthcare industry and the lives we touch. Jim holds a bachelor’s degree in business management and a master’s degree in healthcare administration from Trinity University in San Antonio, TX.

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Jim Bohnsack, Chief Revenue and Strategy Officer, TransUnion Healthcare

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