8 Strategies to Increase Hospital Service Line Revenue, Reduce Costs: Part I

Service lines, including cardiology, oncology, neurology, radiology and orthopedics, can drive revenue but can also be costly. Hospitals should focus on increasing revenue more than reducing costs, as growing revenue is a more viable long-term strategy, according to Marshall Maglothin, principal at Blue Oak Consulting and former cardiovascular service line manager at Cincinnati-based Mercy Health. Cost reduction is necessary, but a hospital can reach a point at which it cannot reduce costs more and maintain the same level of quality. Mr. Maglothin offers eight strategies to increase service line revenue and reduce costs in a two-part article. In this first part, he will describe four strategies to increase revenue.

1. Manage the revenue cycle. The first line of attack for increasing revenue is managing the revenue cycle, as it plays a key role in the service line's finances. Service line leaders should examine the charge description master by procedure and CPT code to identify any CPT changes. For example, payors may discontinue a CPT code, bundle some procedures under one code or unbundle procedures, according to Mr. Maglothin. Verifying these changes prevents claims denials and ensures payment to the service line.

Service line leaders should also compare each procedure's charge with current usual, customary and reasonable fee schedules. Using the UCR schedule as a reference can help avoid over- or under-charging for procedures. For example, the service line may not have updated its charge for a procedure that uses a new technology, while the UCR provides a higher payment for this technology. "I cannot overestimate the importance of taking a business perspective of what you're charging and what's involved," Mr. Maglothin says.

It is also important to compare volumes from the service line's procedure reports with those in the revenue reports to ensure they match. In one instance, Mr. Maglothin says EKGs were mistakenly being attributed to the radiology service line instead of the CV line. The service line director should communicate any necessary changes to staff to ensure everyone uses correct billing practices.

Meet with accounts receivable
A key part of managing a service line's revenue cycle is meeting with the accounts receivable director to review changes necessary to the billing process and solicit suggestions for improving the service line's charge capture. The service line manager should also confirm A/R has a redundant process to verify the service line's charges and determine what tools are being used to monitor charges, according to Mr. Maglothin. For example, A/R may adopt new software tools to track charges. The service line leader needs to know these updates to ensure the staff comply with new billing practices.

Meeting face-to-face with A/R can also help service line managers gain new ideas for improving revenue capture. Mr. Maglothin suggests service line leaders ask what denials A/R commonly sees so the service line employees can avoid errors instead of A/R correcting problems as denials come in.

2. Eliminate throughput bottlenecks. A second strategy to increase revenue is to streamline operations and manage capacity, which can be accomplished through appropriate scheduling. The service line schedule should be an easy process and should always have flexibility to get patients seen quickly. This ability increases patient and primary care physician satisfaction and can help attract and maintain case volume.

Mr. Maglothin suggests the third next available appointment should be within three work days from the point of scheduling so a patient who needs to get seen quickly can do so. If the third next available appointment is nine or more days out, the service line may be losing business, Mr. Maglothin says. For example, he says a patient who wants an appointment quickly may choose to go to another hospital if the first hospital cannot provide an appointment in a reasonable amount of time. "There's no way to judge the business you're potentially losing if you're out more than [three days]," he says.

When overscheduling occurs, the service line leader should meet with staff to develop a corrective action plan. If the backlog is due to insufficient staff for the patient volume, staff may need to work overtime and on weekends to clear up the schedule. The service line can also identify per diem healthcare providers in the area that can be hired when needed to assist with heavy case loads. "There have been times when I've staffed the department fully for Saturday mornings for two to three weeks, and the staff have been supportive of that if they know that it's an immediate plan," Mr. Maglothin says. Once the backlog is clear, the service line can develop a longer-term solution such as hiring more staff if case volume continues to increase. If overscheduling is caused by a lack of equipment, Mr. Maglothin says the hospital can lease equipment short-term to improve throughput and clear the schedule.

Communicate test results quickly
Another aspect of throughput that can increase revenue is test result turnaround. Service lines should aim to send primary care physicians results from their patients' tests the same day, according to Mr. Maglothin. If there is an abnormal reading, the reading physician should call the PCP immediately to communicate the results and then follow up later by sending the results. Being responsive to PCPs' and patients' needs by releasing results quickly can attract more cases to the service line because the PCP knows the department is efficient.

3. Evaluate physicians' utilization. Physician utilization can have a large impact on revenue because greater volume increases the number of payments due to the service line. Service line leaders should monitor physicians' utilization and identify ways to support physicians in gaining cases. Service line leaders should solicit feedback from physicians who have low, medium or declining case volume on ways the department can better support them. The service line leader should respond to this feedback so the physicians feel they are valued. For instance, some physicians may suggest acquiring new equipment to boost their utilization. Regardless of whether the hospital has the funds to acquire new technology at that time, the service line leader should respond to this request. "You [should] be open and receptive even if you're not able to accommodate them exactly," Mr. Maglothin says. It is useful to anticipate physicians' equipment needs by being aware of new and highly desired technology and beginning to plan acquisition roughly two years in advance, as there is usually a time lag to acquire capital equipment, according to Mr. Maglothin.

Service line leaders also need to communicate with their high-utilization physicians to ask if they need anything or if the department can provide anything to support them. Communicating with physicians who have high volumes is crucial in ensuring they continue to bring cases to the hospital.

4. Coordinate with other service lines. A service line can also increase revenue by coordinating services with other specialties. For example, oncology and surgery departments often need cardiology support, while cardiology often needs interventional radiology, vascular and diabetic support, according to Mr. Maglothin. Providing services to patients in other departments can bring in revenue for the service line and improve the patient experience by better integrating services.

Click here to read Part II.

More Articles on Hospital Service Lines:

5 Key Trends Hospitals Should Know for Cardiology Service Line Success
3 Predictions for the Future of U.S. Healthcare: Retail Models, Population Health & Service Line Acquisitions

What 4 Factors Should Determine a Hospital's Service Line Strategy?

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