Volatile net revenue continues to challenge nonprofit hospital CFOs

Hospital CFOs continue to be challenged by the financial metric of net revenue per case, which fluctuates by payer type, according to a report from Crowe, a public accounting, consulting and technology firm.

Using data from its revenue cycle analytics software, Crowe examined patient financial transactions in 622 hospitals within Medicaid expansion states and 389 hospitals in nonexpansion states this year.

When comparing January through September of 2017 to the same period this year, the report found inpatient care volume climbed 0.6 percent overall among the studied hospitals. Outpatient care volume rose 2.4 percent. Crowe said net revenue per case also increased 1.6 percent year over year for inpatient care and 5.5 percent for outpatient care.

Although there were increases in national inpatient and outpatient volume, as well as net revenue per case, data showed net revenue per case was more unstable when broken down by payer class, said Brian Sanderson, managing principal of Crowe healthcare services. Crowe found that year over year:

  • Medicare-paid net revenue per case climbed 4.1 percent.
  • Commercial managed care-paid net revenue per case increased 3.8 percent.
  • Medicaid-paid net revenue per case decreased 6.9 percent for inpatient and decreased 1.1 percent for outpatient. Overall, Medicaid-paid net revenue per case decreased 3.8 percent. "Regulatory changes (for example, changes to disproportionate share hospital payments and 340B Drug Pricing Program benefits) tied to the Medicaid population also will compromise hospitals that treat a greater percentage of Medicaid recipients," Crowe noted.
  • Self-paid net revenue per case increased 14.4 percent. Crowe said the increase could be associated with revenue cycle collection improvements at hospitals.
  • The net revenue per case of "other" payers (third-party liability, workers' compensation and other nontraditional pay groups) climbed 14.8 percent.

"As many health systems expand their portfolio of services to include more outpatient facilities, insurance products and other ancillary investments, stability of hospital-based net revenue becomes more important to financial decisions," said Mr. Sanderson. "Unfortunately, instability appears to be the current trend, forcing many CFOs of nonprofit healthcare systems to study operations and budget them on a monthly or quarterly financial performance basis, in the same manner that their peers in for-profit organizations do."


More articles on healthcare finance:

4 generational differences in the patient financial experience
Nonprofit hospitals' community benefits vary greatly due to outdated federal rules
Texas' biggest nursing home operator seeks bankruptcy protection



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