by
John R. Fischer, Senior Reporter | October 28, 2019
Revenue exceeded expense growth in 2018 for the first time in three years, reaching more than double the rate of the latter from 2017 to 2018. This was brought on by merger activity and in spite of stagnating inpatient admissions and only gradual rises in ambulatory volumes. Health systems also improved by one-half point in commercial revenue yield from insurers, indicating the availability of greater leverage for negotiations. Additional growth was seen in revenue cycle and electronic health record optimization, due to drops in claim denials, shortened collection time and automated, streamlined workflows.
The team warns, however, that the findings only reflect results of 2018 and that challenges still exist for, and beyond, the fiscal 2019 year. This includes a decrease in mergers and acquisitions, with revenue growth experienced in 2018 not expected to be repeated in the current year. Hunter adds that providers must devote more time to managing their revenue and can no longer rely on historical revenue projection methodologies and anecdotal explanations for when they do not obtain desired revenue. He says that being aware of issues that contribute to reductions in revenue growth such as declining commercial volumes, higher self-pay receivables, and a surge in claims denials can enable providers to better manage and curb their spending.
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"They need to proactively manage their revenue like a portfolio to be periodically examined, compared to budgeted existing strategic and clinical initiatives, and re-balanced according to performance," he said. "This includes knowing their revenue yields and expenses as close to real time as possible (as their payers do). Data analytics can help identify the root causes of a health system’s revenue changes across such areas as collection rates, denials, and service mix."
Net operating income from 2015 to 2018 may be partially impacted by initial costs and lag time in expense management, according to Navigant. The rise in operations margins was also based on a broader sample than the revenue-operating income analysis.
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