September 2018
Revenue
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Revenue by Region ?
Revenue impacts differed across the country. Specifically, hospitals in the Northeast/Mid-Atlantic stood out as 10 percent ahead of prior year and 3 percent favorable to budget for NPSR/AD. Not unexpected, this same cohort reported minimal increases in bad debt and charity, and is tracking at or close to budget for these metrics. This may suggest improved payer mix and/or collection efforts, potentially coupled with fewer market-specific government payment changes or volatility. Changes in the IP/OP factor were fairly clustered, with the majority of regions and hospital sizes continuing to see favorable performance against budget, as well as year over year. Rising competition from other providers and new entrants leave hospitals in many markets particularly vulnerable to significant drops in outpatient revenue and profitability.
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
Overall, August revenues per adjusted discharge and patient day were slightly ahead of last year and the previous month. However, reported increases of approximately 1 percent were 2-4 percent behind budget expectations. Even with many hospitals entering a new fiscal year in July, they continued to struggle to achieve NPSR projections, impacting the validity of the related expense and capital investment budgets. Outpatient volumes continued to increase, as evidenced by growth in the IP/OP factor. However, the latest data shows several regions and size categories reporting minor year-over-year declines. Viewed overall, however, hospitals still reported outpatient volumes well ahead of budget projections. This is important to watch given that, in general terms, this metric has continued to grow. Declines typically are representative of niche operators, joint ventures, or retail competitors entering or expanding in a market.
Budget Variance
Month Over Month
Year Over Year
Year Over Year Distributions
(Click to enlarge)
NPSR per Adj. Discharge
(3.9%)
0.6%
1.4%
NPSR per Adj. Patient Day
(1.7%)
0.6%
0.2%
IP/OP Adjustment Factor
2.1%
1.9%
1.1%
Bad Debt and Charity as a % of Gross
(1.1%)
(4.1%)
2.7%
Unless noted, figures are Actuals and Medians
By Region
By Bed Size
National Observations
Revenue by Bed Size
The smallest hospitals (99 beds and below) were most unfavorable to both budget and year-over-year changes in terms of NPSR per AD. This unfavorable performance (-4 percent to -8 percent) may be linked to reliance on changing government funding. This month’s report shows that, while the largest health systems also posted unfavorable variances to budget, they were slightly ahead of prior year. A key driver in these performance swings appears to be continued increases in bad debt and charity, signaling the need for increased focus on better understanding the local impacts of changes to government patient coverages—specifically Medicaid, and commercial payers providing employer-sponsored coverage­—which may be driving larger uncollectible patient residual balances.
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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