Years ago I wrote an article that's sitting on my main website titled Misperceptions And Expectations Of The Charge Master / Revenue Review Process. It's not necessarily meant for the general public; it's meant for people in health care who I try to market my services to, people who should know these things but don't... although it's not really their fault.

increasing hospital revenue
Tumisu / Pixabay

Why isn't it their fault? Health care is a different animal than almost every other business you can think of. Most of the people who are CFO's or titled similarly in health care didn't go to school to learn health care finance. They get MBAs in general business finance, and then get their education via on the job training. Many of them learn their craft from auditing firms; a few work their way up the ranks within a hospital setting.

That's cool and all... but it's not nearly enough. I've often said that one of the problems in health care is having departments report to people who have absolutely no idea what those people do. That's a bit harsh because they do have a modicum of expectation. But ask any of those people to sit down and do the job... ain't gonna happen.

To be fair, it's not just the finance side of things within hospitals. I'm always hearing or reading about a hospital that has an ancillary department (revenue generating departments) reporting to them that they have no clue of what they're doing. The big one these days is having neurology technologists reporting to respiratory therapy. In some cases, hospitals start believing that respiratory therapists already have the training to do EEG services; that's a lawsuit waiting to happen.

Let's get back to finance and my general point. If the people I'm marketing to don't fully understand what I do, then why is it expected that everyone else who's in charge of generating revenue should know how the process works? Often charge capture follows the same process of having a class of 25 students, where the teacher says something to the first student and by the time it reaches the last student the message isn't anywhere close to how it started.

This happens in hospitals all the time. Someone is told how the process should go and that's what they try to do. Sometimes they get it right; sometimes they don't. Sometimes the process they've been taught is correct, but sometimes it's not. Unfortunately, most of the time if the department doesn't know they're doing it wrong, no one on the inside is going to know they're doing it wrong. You wouldn't believe how much revenue goes missing on a daily basis; imagine the yearly losses!

hospital revenue cycle
jarmoluk / Pixabay

Because I'm not sure how many readers will check out the link above, I'm going to highlight one line from that particular article that gets to the heart of what I do for health care organizations that need someone to look at their revenue process, whether it's looking at their charge masters or doing a full review of their entire charge capture (aka revenue cycle) process.

The line is "At one facility, a discussion with one department that took four hours ended up finding almost $2 million in yearly revenue that was being missed.

The truth behind that line is, though the time I spent met with this department was four hours, it was actually only the last 30 minutes where I found the $2 million dollars. By asking one particular question, and having an idea of what was coming based on the answer I received, I started a process to get to a resolution I expected.

By answering that one question, then going back and looking at revenue numbers for what they'd been doing for a month, and then doing some quick calculations on charges they'd been missing, I was able to determine that if they only kept doing the work they were already doing but started capturing charges properly, they would increase their revenue by that $2 million amount. Thirty minutes to correct a process that had cost them at least $10 million over a 5-year period.

For the uninitiated, that doesn't mean it translated into that much cash, because hospitals never get paid what they're billed. But based on estimated reimbursements for the specific services they were providing, it could have increase their cash by anywhere from $400,000 to $800,000 a year; even the largest hospitals wouldn't turn their heads at that amount.

Not bad, right? True, it didn't come close to the $730 million I helped find at a different hospital, but that one took me a year. 🙂

I always cringe when I hear about hospitals whose first reaction is to start cutting staff rather than see if they're maximizing their revenue. They still have have to cut staff at some point, but it's always better to know that your process is operating at maximum efficiency. If you don't know what you don't know, you're never going to figure it out.

No worries; I'm here when you need me! 😉