Hospital Revenue Unstable Despite Outpatient Volume Growth

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Hospital Revenue Unstable Despite Outpatient Volume Growth

Recently, there has been an increase in the number of national outpatients and inpatients in hospitals. Despite this, as per the analysis done by the firm Crowe, the net revenue generated by hospitals continue to fluctuate.

What does the study show?

As per the analysis, out of the 622 Medicaid expansion states hospitals and 389 non-expansion states hospitals, the number of inpatients increase by 0.6 percent in 2018 while the total revenue generated per case increased by 5.3 percent.

Meanwhile, the volume of outpatients also increased by 2.4 percent and their revenue by 7.1 percent.

What does it mean?

While the study proved that hospitals are benefiting from an increasing volume regarding patients, it also shows that the net revenue generated per patient is prone to fluctuations in both inpatients and outpatients.

For instance, between 2017 and 2018, inpatient net revenue merely increased by 1.6% while outpatient net revenue rose by 5.5%.

However, one must remember that these trends are averages and hence may not be true for all payers. In some hospitals, you will find high growth in net revenue per patient while other hospitals might be more exposed to decreasing growth.

Overall, the fact that net revenue is increasing may reflect a positive trend for hospitals. But, when you see how such revenues are increasing, it is safe to conclude that the trend is quite troublesome.

Researchers at Crowe pointed out that the payer mix is changing. Self-pay, other payers, and Medicare care mix increased by 1.6 percent in case of inpatient and 1.1 percent for outpatients.

The problem with this payer mix is that they have low net realization and hence it can get difficult to predict future net revenue. This is especially true because of the varying level of patient engagement from one facility to another as well as seasonality issue in such payers.

One of the biggest things that played a role in revenue instability in hospitals is the increase in people who paid for their medical expenses on their own. This is because such accounts are difficult to collect, leading to volatility in revenue collection.

Meanwhile, Medicaid revenue decreased between 2017 and 2018. For inpatient, it decreased by a whopping 6.9 percent while for outpatient it lowered by 1.1 percent. According to Crowe, in light of recent regulatory changes, this trend is likely to continue in the future.

According to the study, there is also a decrease in denial write-offs. This refers to bills that were not cleared by payers. Between 2017 and 2018, the denial write-offs witnessed a decrease of 15% in outpatient services. This is a positive trend since it is an indication of improvement in the business office segment of the hospital.

But, whether this trend will continue in the future is another story. This is because the contracting of managed care might increase denial write-offs in the future.

Conclusion

Time will tell whether the alarming net revenue volatility would continue in the future. If current regulations were to continue, hospital revenue is likely to remain unstable despite growing volumes in outpatient and inpatient services.