• AHAP Inc.

Hospital execs expect drop in commercial reimbursement, cuts to revenue cycle IT budgets

About 70% of health system and hospital execs are expecting a uptick in self-pay customers and Medicaid patients—and a drop in commercial reimbursement—in the wake of the COVID-19 crisis, according to a new analysis.


According to a Guidehouse Center for Health Insights analysis of an executive survey conducted by the Healthcare Financial Management Association (HFMA), hospitals have been turning to remote consumer engagement by increasing use of telehealth (92%).

That includes using telehealth to better engage patients and address consumer responsibility (73%), financial counseling (63%), and online portals for price estimates and payment plans (56%) amid challenges posed by the pandemic.


"With health system margins primarily driven by elective services, the pandemic is gravely impacting provider revenue streams and payer mix," said Guidehouse partner Timothy Kinney in the report. "As our economy labors post-pandemic, insured patients will struggle to shoulder greater cost sharing through high-deductible plans coupled with volatile unemployment rates. Healthcare leaders need to closely evaluate their payer mix and develop winning consumer experience strategies to overcome a slow recovery in patient volumes and an uptick in self-pay and Medicaid enrollees."


Meanwhile, an increasing number of execs indicated their organizations are eyeing cuts to revenue cycle management IT systems in the next year (27%) compared with 5% who indicated plans to cut those budgets in 2019. Meanwhile, 35% of executives said they planned to increase those revenue cycle budgets in the next 12 months, down from nearly 70% the year before.


Instead, hospitals execs said they planned to employ strategies to decrease revenue cycle costs and increase economies of scale such as leveraging vendor partnerships (37%), outsourcing (32%) and using predictive analysis, AI and robotic process automation (27%).

The survey garnered responses from 151 executives from 110 hospitals and 41 health systems. About two-thirds of respondents identified themselves as finance directors, vice presidents, directors or supervisors, and one-third said they were C-level executives.

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