Revenue Healthcare Revenue for Healthcare

Revenue Healthcare

Revenue for Healthcare Facilities

The objective of this paper is a review of the trends, innovation and future of finances, revenue streams and investments in the healthcare industry. In doing so the author will propose several choices or alternative sources of revenues for hospitals treating an ever-increasing number of patients that rely on Medicare and Medicaid for insurance. At the time of this study, most hospitals fell short of revenue goals because Medicare and Medicaid doe not provide adequate compensation to meet the needs of our aging population (AHA, 2006).

One of the biggest sources of revenue for healthcare facilities is Medicare and Medicaid. Despite this many organizations are not able to survive on the payments provided by Medicare and Medicaid alone. The purpose of this paper then is to provide a detailed analysis of how hospitals can protect revenue streams as the number of patients with Medicare or Medicaid as primary insurance rises.

Overview Medicare & Medicaid

For many disabled, elderly and injured individuals, Medicare or Medicaid are the primary sources of health insurance. Medicaid helps people that are not able to pay for medical care by paying for many healthcare services. The amount reimbursed however, or paid to healthcare facilities often falls short of what most private insurers offer. Those that most often seek Medicaid assistance include individuals with larger than average medical bills, those with disabilities and those receiving income from social security (U.S. Dept. Of HHS, 2007a). Medicare provides healthcare assistance primarily to the elderly, but there are many restrictions on the healthcare services provided. For example, if a patient requires home nursing care, they can only be seen by a Medicare certified associated or at an approved facility that is not within their reach (U.S. Dept. Of HHS, 2007a).

Unfortunately, while these programs offer some assistance to patients, Medicare and Medicaid often fall far short of need when the time comes to pay for lengthy hospital stays. Legislation in recent years has proposed cutting the budget for Medicare and Medicaid in the past, something that would only increase the problem hospitals and other healthcare facilities have when collecting revenues for treatments offered to the Medicare and Medicaid population (AHA, 2006). Many hospitals and other facilities have gone as far as denying treatment because they cannot keep up with costs associated with caring for those without secondary insurance.

Background and Review of the Problem

It is critical that financial analysts realize the facts. The population is aging, with more and more people entering the age group of 80 and older (AHA, 2006). At such an advanced age, few people are still working at an establishment that provides comprehensive insurance, thus they rely on Medicare or Medicaid for many of their healthcare needs. The needs of an aging population are often more extensive than the needs of a younger, healthier population. The American Hospital Association (2006) has repeatedly expressed concerns about cuts to Medicare and Medicaid, noting it is critical healthcare facilities are able to "meet the needs" and "improve the quality standards" of care offered the population through various methods including more stable funding.

Tools Used in the Past to Generate Revenue

In the past hospitals and similar healthcare facilities used sources of revenue including "patient supply charges" to help increase profits (Hurwitz, 1993). These charges were those that healthcare facilities billed to patients and included billing for the use of supplies including those used in care and during surgery (Hurwitz, 1993). However, due to much protestation, this became a less stable form of revenues especially as initiatives were passed to control expenses and costs in hospitals (Hurwitz, 1993). Other methods used to try to control costs included establishing "set" payments, or a specific amount that would be paid for patient care contingent on their diagnosis; this amount would be paid regardless of the patient's length of stay, secondary diagnoses or other problems (Hurwitz, 1993). Unfortunately these attempts at bolstering revenues and controlling costs also failed, especially as healthcare facilities realized that patient care is something that cannot be standardized, and that each patient responds to care and treatment differently. For example, one patient may receive surgery and recover within 48 hours; another patient may receive the same surgery, but because of a pre-existing undiagnosed autoimmune problem, may require an extensive hospital stay to recover. For this reason hospitals and healthcare facilities are now looking at tools they can use to save money to create money.

Tools That May Save Money

One way to increase revenues is to reduce costs associated with doing business. Many companies are looking at the U.S. hospital market and other healthcare facilities, encouraging them to adopt more efficient processing policies. In doing so they may reduce their expenses, which would lessen the impact associated with declining revenues. SSI Group Inc. For example, suggests hospitals can help streamline admissions, registration and healthcare management processes through technology, which will allow organizations to gather information they need including referrals for patients without spending time and money on administrators to perform such services (SSI, 2007). But taking employees out of the picture to help reduce the costs associated with providing quality healthcare is not at ideal solution for many.

Outsourcing many job functions however, and automating processes that can be automated without compromising quality may indeed be the best way to help generate more revenues and save revenues in hospitals and other healthcare facilities. More and more private companies are finding ways they can help healthcare facilities maximize the reimbursement they will receive from Medicare and Medicaid, while training organizations to improve their cash collections processes and accounts receivable management (Katz, Sapper & Miller, 2006).

Other Sources of Funding

Mohan (2002) offers other suggestions as to how healthcare facilities can compensate for the loss of revenues associated with the use of Medicare and Medicaid and the aging population. The author takes an abstract approach, suggesting savings and revenues may be found through the use of advanced technologies and more attention to preventive medicine. The idea of "you have to spend money to make money" applies when it comes to technology. However, by educating doctors and other healthcare providers about innovative techniques, hospitals and other facilities can adopt standards of practice that involve the use of "minimally invasive" techniques especially those related to surgery (Mohan, 2002: 214).

Patients subjected to less invasive surgeries require fewer stays, and can even have some procedures performed on an outpatient instead of an inpatient basis. Studies previous to this (West, 1998) conquer, suggesting shorter hospital and healthcare stays will result in greater revenues for healthcare facilities. Other sources of revenue include the use of volunteers, trained volunteers, to assist patients in their recovery or those with long-term care needs living in the home (Mohan, 2002). Still other solutions include paying more attention to preventive care. Some theorists (West, 1998) and medical researchers argue that insurance providers and healthcare administrators should approach health from a preventive rather than a "putting out the flames" type of approach. Preventive care can be combined with the use of better diagnostics using more modern technology to catch severe diseases earlier, so treatment is less extensive and therefore less costly (Mohan, 2002).

Other proposals emphasize the use of preventive care along with "primary and community care" (Mohan, 2002: 214), suggesting education, care by a designated provider and care amongst community providers and members may be beneficial for patients and help reduce the burden of costs many traditional healthcare facilities currently face (Mohan, 2002). One other area where healthcare organizations can boost revenues according to some is the area of medical staffing (Mohan, 214; West, 72). Mohan (2002) notes more and more elderly are calling on emergency medical staff, an expensive gesture, because the community does not offer provisions to help provide support or at-home care at a reasonable price. Thus, one may argue focusing on the community as a provider of support and resources may result in decreased expenditures and greater revenues for primary health facilities. Naturally this will involve training medical care staff working in communities, as well as laypeople volunteering in the community.

Medical staff should be trained so they have a thorough knowledge of their field and occupation, and so they have the ability to educate patients so patients are able to care for themselves better when at home or outside of the healthcare facility. There is some interest in moving the responsibility of diagnosing and primary care of patients to well-trained nurse practitioners and junior doctors to help save on costs associated with hiring advanced medical doctors or specialists (Mohan, 2002). It is important however when looking at ways to maximize revenues and minimize costs one does not give up quality service. This does not suggest that nurse practitioners or junior doctors will not provide ample care; rather, the suggestion is that these professionals receive additional training so they are able to facilitate better care and assist in the healthcare environment in a more relevant capacity, one that frees up hospital resources (Mohan, 2002).

How to Protect Revenue Streams

The purpose of this research analysis was to discover tools healthcare organizations and practitioners can use to increase revenue streams while facing the rising costs of healthcare and an increasingly aged population relying on Medicare and Medicaid for healthcare coverage. Traditionally Medicare and Medicaid offer very little in the way of comprehensive medical services. This has inspired with healthcare community however to come to the realization that hierarchical care within healthcare facilities is no longer a viable means of providing care to patients in need. Cutbacks can be made but often they will result in substandard care for those that need care the most.

The researcher conducting this review proposes healthcare facilities adopt a horizontal approach to healthcare. Such an approach would as inferred by the literature, enable hospitals to work with communities, volunteers and junior level providers to provide comprehensive preventive and minimally invasive care for patients. Such care would involve training and educating junior medical professionals or nurses so they have the ability to treat patients more comprehensively using advanced diagnostic tools.