Seasons Can Have an Impact on Hospital’s Revenue Cycle Performance

Seasons change. And they bring changes along with them as well.

And this doesn’t just pertain to the seasonal flu.

Instead, healthcare has a lot more to do with changing seasons than the type of patients and ailments each season brings in.

What else do seasons do to a hospital?

Well, for one it impacts its revenue cycle performance. This has been observed after a recent analysis was conducted whereby the revenue cycle performance of over 1000 hospitals was monitored and analyzed.

Finance teams of most of the hospital’s researched reported that there were significant fluctuations in the net revenue earned by the hospital depending on the season.

Performance trends

The following trends were observed in the revenue cycle performance of hospitals:

•    In January, Account Receivables were the highest. After this month, the value decreased throughout the year. There were more claim denials and outpatient revenue per case during the month.

•    From April to June, the revenue cycle featured stability in terms of volume as well as net revenue collected. However, claim denials, as well as debt transfer, saw a significant increase. This was especially true for hospitals whose fiscal years ended in June.

•    In the third quarter, most revenue cycles witnessed an all-time low. However, stability was also a prominent factor. From July onwards, gross revenue generated increased by the outpatient volume decreased.

•    From October to December, the performance of the RCM was quite favorable. The net revenue per outpatient case saw a hike along with inpatient revenue. Compared to other seasons, final claim denials were at an all-time low. The Average Receivable account was at the lowest while the bad debt transfers increased compared to the average rate.

The reason for the fluctuations

Reasons were also sought for the current fluctuations in the revenue cycle. According to the head of the finance department in the various hospitals, fluctuations occurred in the revenue cycle for a plethora of reasons.

This included:

•    End-of-the-calendar-year benefit enrollment

•    Flu season

•    Summer physician specialty conferences

•    Medicare payments

While there is no clear evidence that these reasons do play a role, the significant trends do show that they might have some standing.

How to account for the fluctuations?

Recommendations have been made regarding how the seasonality issue can be addressed. Rather than using the conventional budgeting process, it is advised that CFOS and their finance team should come up with a new process.

Here, the previous year’s budget should be used as a baseline to predict next year trends. The process should be done quarterly rather than annually.

This can help the department to better anticipate the changes and adjust to different circumstances accordingly. By projecting the next years’ revenue performance, health system operators can alter their resource needs and other cost drivers accordingly.

Conclusion

Seasonality is likely to remain a driver for fluctuation in the future. This is true because consumerism is on the rise.

Also, this is why out of pocket payments are increasing, which in turn causes changes in the revenue cycle performance.

Hospitals need to come up with ways to deal with it effectively.

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