Hospital Profitability Steady, But Rev Execs Shouldn't Let Up

Strategizing for low patient volume and revenue is a must for revenue cycle leaders.

Financial stability is a priority for all health systems as they struggle with inflation and rising operating costs. However, despite an optimistic first quarter, hospitals aren’t completely out of the woods yet.

An operating margin index report by Kaufman Hall showed a 0.2% drop between February and March of this year, with the index dropping to 3.9% from 4.1%.

In addition to a decline in major KPIs in March, the report also found many hospitals experience reduced volume and revenue—which may foreshadow challenges to financial stability to come.

Outpatient services fell by 5% in April, as a result of continuously declining volume. There were also increases in bad debt, charity care, as well as the number of days in accounts receivable.

As patients become responsible for more of their care costs, systems must adapt their financial strategies to accommodate them. This can be done in a number of ways, like offering payment plans, accepting different payment methods, or simply making the payment process as quick and easy as possible.

At Ochsner Health, patients are able to set up payment plans and make payments online through the system’s patient portal. For patients who may not be as tech savvy, or prefer to speak to someone, they’re also able to make payments over the phone.

Leaders are also looking at ways to cut or contain costs to ensure a positive operating margin. Kristin Largent, senior vice president of financial operations for OSF HealthCare, previously told HealthLeaders how the system was able to rebound after struggling with declining operating margins.

Increasing patient volumes towards the decline of the COVID-19 pandemic, reducing agency costs, and renegotiating managed care contracts were all attributed to the system’s success.