When presented with the Profit and Loss statement for the last three months, Rut

Question

When presented with the Profit and Loss statement for the last three months, Ruth Bower, CFO of City Hospital notice that the revenue over this period had increased significantly as compared to prior year levels. Although she was happy to see a positive trend, she she needed to understand the reasons for this change. After going to a workshop focused on strategies to enhance revenue capture for Health Care Service Organizations, she had instituted a number of programs. First, she had used a consulting firm to help inform and train caregiving individual (MDs and RNs) about the importance of coding. She had also worked on shortening the reimbursement cycle by focusing on periods that took seemed the longest, e.g. between discharge and billing, and between billing and payment by the payers. Finally she had tried to reduce the number of non-paying patients by reducing the size of the emergency room and more rigorous training of the reception staff.

Required;

In your opinion, what would you advise Ruth as to pros and cons of each of her programs if she finds that each of them contributed to the increase in Revenue? Your answer needs to be comprehensive in that it needs to address all of the pertinent issues with each of these programs so that Ruth is advised better as to which one or ones to pursue further in the future.

Explanation / Answer

Let us look into each of the programs initiated by Ruth:

Program 1: Training on codification

Medical coding includes taking the descriptions of injuries, diseases and other medical problems and converting the same into numeric and alpha numeric forms for easy identification.This is inturn related to billing purpose. If a proper coding in healthcare industry is done, it will be easy for generating bills. Easy generation of bills will lead to speedy recovery from the Insurance company. This reduces the reimbursement period.

Ruth, by adopting codification in her hospital, it will reduce the reimbursement cycle with the insurance companies. Hence, she can continue with this program.

Program 2: Shortening Reimbursement period:

This could be the strong reason for increase in the revenue of the hospital.If the hospital realises revenue the sooner, the more revenue it generated. Hence, Ruth can continue with this program and take all the necessary actions to reduce the reimbursement cycle.

Program 3: Reducing nonpayment patients by reducing the size of emergency rooms

The main aim of hopitals should be provision of quality healthcare services. It will not be a right decison to reduce the size of emergency rooms to increase the revenue. Instead a proper training to reception staff can help in avoiding the nonpayment patients. Therefore, Ruth should not reduce the size of emergency rooms and instead train staff on the ways for reducing the nonpayment patients.

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