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Revenue Recovery

No matter how well you plan and execute every other aspect of hospital financial management, if you are unable to achieve timely and essentially complete payment for delivered services you’re not pursuing the most direct route to financial success

Bad debt is on the rise in the hospital industry.  In a national survey, hospitals reported 4.74% of gross revenue written off as uncollectible debt in the fourth quarter of 2006.  Of that amount, 2.51% was allocated as charity write-offs.  The remaining 2.23% was allocated as bad debt.

Many hospitals are already operating with negative total margins; bad debt only increases those losses.  These financial issues can divert valuable time and resources that could be better spent on patient care.  Compounding this problem are the more than 46.6 million uninsured Americans. Another 16 million Americans are classified as underinsured.  Additionally, employers are increasingly offering employees Consumer-Directed Healthcare Plans (CDHP) and other high-deductible health plans (HDHP), resulting in more costs being passed on to employees who cannot afford the plans’ high deductibles.  

​It’s critical that hospitals take steps now to better manage and reduce bad debt.  By focusing their resources on both the front- and back-end of the revenue cycle, hospitals can improve collection rates and increase cash flow. Implementing automated revenue cycle tools on the front-end can help hospitals verify patient identification and financial information; determine whether patients are likely to qualify for financial assistance or should be considered self-pay; and determine appropriate payment plans or collect patient balances up front.  Verifying patient information at the time of the visit should include checking  identities, insurance coverage, benefit limits and co-pay amounts to reduce misallocated or denied claims. All of these measures increase up-front  collections and can directly impact the ability to collect efficiently post-discharge. 

On the back-end, automated revenue platforms can help the hospital staff analyze which accounts are most likely to pay and focus their resources more efficiently.  Staff can rank accounts according to a patient’s ability to pay rather than just by bill amount.  They can also re-evaluate older  accounts to verify whether there are financial changes that might precipitate payment, such as accounts that were misallocated and actually qualified for third-party payments. Hospitals may better determine which accounts should be  outsourced or integrated back into their in-house collection process.  Many hospitals have achieved significant reductions in their aged accounts receivables by implementing these efficiencies on their back-end collections processes.


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  • Home
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