OR revenue

Hospitals make more money on surgical patients than medical patients. There are a number of reasons for this but the most basic is that they are simply reimbursed more for the surgical patients. This can lead hospitals to think they are generating all the revenue they can from their OR. Unfortunately, this is very often not the case. So here is what you need to know about OR revenue and how to recover it.

Let’s play categories

Ever since the health system moved to a fee-per-service model, the focus has been on procedures. In surgical units, this can seem easy because the operations are very clearly defined. Yet there is tremendous nuance within each case that can alter the complexity of those procedures, as well as the patient’s recovery and aftercare. 

It is these differences that impact the resources a hospital expends on each patient. Yet those resources are frequently ignored because the surgical procedure is coded the same in all cases. As a result, the hospital loses out on substantial revenue.

Let’s look at just one example. The first case is a 35-year-old man in need of a knee replacement. He has been a marathon runner for years and, knee aside, is in great shape. Now take a look at a 72-year-old man who needs a knee replacement. He has had worsening arthritis for several years and has put on weight due to restricted mobility. He is being treated for high blood pressure and has cholesterol and blood sugar levels that are borderline-high. 

Obviously, these two cases are profoundly different, even if the knee replacement is the same. They have each entered the hospital in vastly different health. They will respond to the surgery differently and it is reasonable to expect different recovery times. 

Hospitals believe they are on top of these differences due to their use of levels or points systems. Yet these systems are rarely reviewed to ensure they are capturing every charge. 

ORs are at particular risk

These inaccuracies are a hospital-wide concern but they play an outsize role in the operating room. In part, this is due to the sheer number of surgical procedures performed. There are simply more procedures to charge for in an operating room as compared to a patient admitted to a medical ward. Add to this the fact that surgical procedures often get a higher reimbursement than medical procedures. All this combines to make missed charges in the OR both more frequent and more costly. 

How to recover OR revenue

Of course, OR doctors and nurses are unlikely to notice these details. They are rightly focused on patient care, not hospital revenue. Similarly, it is impossible for revenue cycle teams to understand what’s being missed, since they lack clinical knowledge. 

The only way to recover this missed OR revenue is to have someone with both clinical and revenue cycle expertise review the situation. Most hospitals lack people with this combination of expertise so this typically requires an outside consultant, such as Net Revenue, who would ideally work on a contingency basis so the hospital is out nothing unless revenue is recovered. The consultant would look through all OR procedures for details that have been overlooked but should have been submitted for payment. They will also update the hospital’s billing process for submitting these charges in the future. 

A new approach

This method requires a different way of thinking about the problem, but it is the best way for hospitals to recover missed OR charges. The effort involved in bringing someone in to review the OR charges is more than made up for by the increase in revenue.

Photo by Olga Kononenko on Unsplash

Missed Opportunities

The Hospital CEO and CFO Guide to Recovering OR and ER Charges

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