Hospitals' cash on hand dwindles

The median health system saw its cash reserves fall 28% from January 2022 through June 2023, dwindling from 173 to 124 days, according to a new report jointly commissioned by the American Hospital Association. 

Fewer days cash on hand leaves hospitals and health systems across the U.S. less prepared for sudden emergencies, such as natural disasters, mass casualty events, or an epidemic or pandemic. 

The joint report from AHA and Syntellis suggests payers' inconsistent reimbursement practices and delays have contributed to hospitals' cash flow problems. The median hospital saw its percent change in overall revenue reductions related to Medicare Advantage denials increase nearly 56% from January 2022 to July 2023. Denial-related revenue reductions from commercial payers increased 20% over the same period.

Hospitals' fluctuations in accounts receivable are another contributing factor. Through the 19-month period analyzed, the dollar amounts in AR for every $1 million in net patient service revenue fluctuated up to $14,287 for commercial payers and $8,872 for Medicare Advantage payers from one month to the next, according to the report.  

The report is based on data from over 1,300 hospitals and health systems, analyzed by Syntellis Performance Solutions and the AHA. Find the report in full here.

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