July 2018
Revenue
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Revenue by Region ?
Organizations in the Northeast and South are beginning to see increases in year-over-year NPSR, which may be reflective of specific clinical seasonality in their respective areas this year. Both the Midwest and Great Plains have experienced significant year-over-year declines and are dramatically behind budget. This trend undoubtedly will put tremendous pressure on organizations, and require leaders to understand the underlying causes as they develop budgets and project future performance.
NPSR per Adj. Discharge
NPSR per Adj. Patient Day
IP/OP
Bad Debt and Charity
NPSR per Adjusted Discharge
NPSR per Adjusted Patient Day
IP/OP Adjustment Factor
Bad Debt And Charity
National Revenue Observations
As more payers move to per case reimbursement, hospitals must focus attention and closely monitor Net Patient Service Revenue (NPSR) per case, versus the more traditional per adjusted patient day metric. However, NPSR per adjusted patient day does remain a valid metric, and provides insight into how an organization may be managing patient throughput and length of stay. This month volume-adjusted NPSR saw no change from last year at this time. Yet it is 7% under budget for the month, indicating the predicted improvements in NPSR did not materialize as planned. Leaders will need to closely analyze changes in payer and service mix that are key drivers to these metrics and to overall organizational operating margins. The ability to better forecast and budget for revenue swings is imperative. Changes in the IP/OP factor are fairly clustered in June, with all regions and hospital sizes continuing to see favorable performance against budget. Outpatient volumes and revenues traditionally translate to a positive financial return for health systems, but acute hospitals also typically face tremendous competition from other providers, including physicians and for-profit organizations. Hospitals can be vulnerable to significant drops in outpatient revenue and profitability when new market service options open. Growth in this factor indicates a continuing trend of increasing outpatient volumes.
Budget Variance
Month Over Month
Year Over Year
Year Over Year Distributions
(Click to enlarge)
NPSR per Adj. Discharge
-7%
0%
0%
NPSR per Adj. Patient Day
-2%
-1%
0%
IP/OP Adjustment Factor
1%
-1%
1%
Bad Debt and Charity as a % of Gross
0%
-4%
6%
Unless noted, figures are Actuals and Medians
By Region
By Bed Size
National Observations
Revenue by Bed Size
Every size hospital is experiencing negative performance as compared to budget expectations for NPSR per adjusted discharge. However, year-over-year actuals for this same critical metric have remained steady or risen slightly for all but two of the bed size categories (0-25 and 300-499). Actual payments have exceeded budget expectations almost across the board, reflecting strong conservatism—a natural response to the extreme levels of uncertainty around future payment rates. Decreases in NPSR for the smallest and mid-sized organizations potentially suggest decreases in case severity and eroding payer mix for independent or community-based hospitals. This month’s report shows actual year-over-year declines of IP/OP factor for hospitals with 200 to 499 beds. This is significant given that this metric generally has continued to grow, and declines typically are representative of for-profit, joint venture, or retail competitors entering or expanding in a market.
NPSR per Adj. Discharge
NPSR per Adj. Patient Day
IP/OP
Bad Debt and Charity
NPSR per Adjusted Discharge
NPSR per Adjusted Patient Day
IP/OP Adjustment Factor
Bad Debt And Charity
By Region
By Bed Size
National Observations
©2018 Kaufman, Hall & Associates, LLC
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