In the past few years, hospitals have been able to improve many revenue cycle components. Although this is good news, a recent Revenue Cycle Survey from Advisory Board showed that there has also been a drastic increase in claim denials. This raises concern for financial stability as we look towards the future. Other revenue cycle challenges include patient collections, the cost to collect, and cash flow issues.
Studies show that health systems and hospitals have practically doubled the total number of written off claim denials from six years ago. However, by filing claim denials, organizations may be able to regain some of their financial losses. Recent trends suggest that this process can be especially difficult for hospitals and it should continue to be into the future. This is evident from the declining success rate of claim denial appeals in recent years. Technical errors used to be the main reason for claim denials. Nowadays, the primary reason is that industry is moving towards to value-based reimbursement and this has caused hospitals all sorts of problems. In order to regain their investments, they need to showcase the importance of their patient care. They can also develop plans that would demonstrate improved clinical documentation.
The Affordable Care Act and Medicare expansion in some states have provided more insurance coverage to individuals across the country. The downside to this has been that hospital bad debt has declined. Also, unpaid financial responsibility has dropped for high deductible health plans.
Cost To Collect
The Advisory Board has claimed that it is essential for hospitals and health systems to collect at the point-of-service. This is because many patients are being forced to cover more of their costs. There are opportunities for hospitals to grow financially. In many cases, they have the ability to offer patients discounts, which would increase point-of-service patient collections. The hospitals and health systems which have used this strategy have seen massive growth.
Hospitals and health systems have seen a drastic increase in cash flow in recent years; however, some researchers assert that financial improvements can be traced back to many of the write-offs.
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