8 MAY - 2023Rethink Revenue Management to Overcome Challenges2022 left most health systems and hospitals with negative or slim margins. 65 percent of hospitals will finish 2022 with a negative margin and most analysts are predicting a poor first half of 2023. Headwinds from labor and supply costs, tougher payment rules from payers, and unpredictable patient volumes are driving poor financial performance. 2023 will have a resounding theme of recovery with a major focus on expense management. A clear path to financial recovery will involve making some difficult decisions on operations and spend. Numerous research firms have reported some recovery in finances for hospitals in 2022, while at the same time, margins have remained negative for every month in the year for most hospitals. Visit volumes have been below pre-pandemic levels as well, as FinThrive data has revealed that hospital visit volumes have remained below pre-pandemic levels for the majority of 2022. This, in combination of exponential labor and supply cost increases has placed organizations on their heels for financial sustainability. As rating agencies carefully evaluate the outlook for 2023 for hospitals, they are hesitant to prematurely provide indications that we are through the worst of it-- in fact, they have indicated early 2023 may be one of the most difficult starts to the year for healthcare yet.As organizations quickly ramp up their efforts to recover lost revenue, line-of-sight insights for recovery can be challenging. Many organizations leverage a myriad of vendors to manage revenue, as several healthcare organizations now have an average of 25-40 technology providers dedicated solely to various parts of the revenue cycle. Studies have shown that the more vendors in place to manage revenue, the more risk to recovery and higher risk for more denials. Multiple, siloed bolt on vendors leads to friction in revenue cycle and accelerates a health system's financial challenges by contributing to recurring denials, underpayments, and high vendor management costs. The revenue `cycle' is broken-- ask any leader in this space and they will tell you there is significant opportunity to improve. Areas such as cash flow, frictionless payment from patients and payer, as well as deteriorating relations with payers all are ripe for harvest. In the current state, transactions flow through a set of processes over and over. But this cycle, like a carousel, only goes in circles and is inefficient. There is a better way. Effective healthcare revenue management doesn't need to recreate the cycle. To truly empower healthcare and help it realize its potential, we must break the cycle of inefficiency and rethink revenue management.Financial leaders must shift their thinking to a new paradigm. Rethink the revenue management holistically to have longitudinal account level control of every transaction. By Jonathan Wiik, MHA MBA CHFP, VP Healthcare Insights, FinThriveIN MY OPINIONIN MY OPINIONIN MY OPINIONJonathan Wiik
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