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Generating and Managing Revenue in a Healthcare Organization


Generatingand Managing Revenue in a Healthcare Organization

Generatingand Managing Revenue in a Healthcare Organization

Generatingrevenue in a health care institution can sometimes be critical andcomplicated. Hospitals are meant to treat people with all sorts ofillnesses. However, achieving the goal can be difficult when theprocess involved in the treatment of the sickness is a complicatedprocedure such as heart surgery. In many cases, patients might notget the services they need because the treatment could beprohibitively expensive (Singh et al., 2012). Additionally, somepatients are unable to pay for other considerably cheap treatmentcosts. Usually, the government subsidizes some of the treatmentservices, especially in the public hospitals. On the other hand,private healthcare facilities have to fully generate funds throughthe services they offer (Coleman, 2013). Managing of revenue in ahealth care organization should be handled in a careful way so thatit does not become a barrier for patients from getting whateverservices that they might need.

HospitalFinancial Management

Singhet al. (2012), in the article ‘Hospital Financial Management,’illustrates the connection between revenue management andprofitability of hospitals’ in relation to the ability to growequity. Using data acquired from 1,397 nonprofit making hospitalsbetween 2000 and 2007, the research analyzed the link between thehospitals` performance in the management of returns and theirprofitability and capability to offer quality services. The findingsrevealed that high payment from patients in hospital was linked withstatistically noteworthy service provision efficiency. Hospitals thatcollected much from their patients reported higher profit margins andlarger equity values. These findings are crucial for hospital revenuemanagers because they prove that health care institutions canfunction without necessarily making profits. However, the situationapplies to public hospitals only because the government will beresponsible for the payment of the practitioners (Singh et al.,2012).

Nowor Never

Inanother article called ‘Now or Never,’ the authors examine thecommitment to value-based reimbursement in hospitals. They noted thathealth care is too inconsistent, redundant, fragmented, andexpensive. However, with value-based reimbursement and reformsmarching across the healthcare sector, a significant shift isbeginning to take hold. The government is the greatest financier ofpublic hospitals (Edmondson &amp Samet, 2015). To achieve theirmissions of providing treatment services to all the citizens,hospitals have to get funds from other sources without necessarilydepending on the patients. According to the article, many executivesare struggling with the question on how big health care organizationsshould reinvent themselves to thrive under the value-based program.The report reveals that in 2009 the state of Maryland started avalue-based reimbursement system that majors on potentiallypreventable conditions. Due to this unique payment system, the statehas become a hotbed of innovation. By the provision of a 30 yearCenters for Medicare and Medical Services Waiver, hospital rates areset by a commission with the capacity to explore the new approachesas long as the cost of Medicare remains low (Edmondson &amp Samet,2015). This research is useful to healthcare organizations because itprovides financial management systems that aim to reduce the cost oftreatment while at the same time maintaining high-quality medicalCare.

Whatare Revenue Sources?

Revenuesources for health care organizations are the different ways that thefacilities acquire funds. Most hospital resources come from billingthe patients. This can be in the form of cash in which the sickperson pays directly or through health insurance companies.Government funding is also a major income source for hospitals.Health centers need revenue to ensure that their functionality is notaffected.

HowAre Rates Negotiated With Payers?

Hospitalrates are based on many aspects. Normally, the nature of health careservice is mostly considered. Then, the cost of that service isevaluated based on the technicality, medicine, and all the relevantresources that will be used to offer that service. Usually, thepatients have no say in the negation of the rates because they do notknow the technicality of the service that they need. However, thereare set regulations that guide on what the health care rates shouldbe.

Challengesof Changing Models in Managing and Forecasting Revenues

Numerousaspects cause the challenges of changing models in managing andforecasting revenues. Firstly, the advancement of treatment ofparticular illnesses causes the management of revenue to change.These new procedures might be lower or higher when it comes topayment (Coleman, 2013). Secondly, government interference is anothermajor factor. The government might subsidize the treatment of certaincomplications in both private and public hospitals thus, making ittough to manage and forecast revenue rates. Third, the nature ofcomplication that a patient has is another factor that makes revenueforecasting difficult. Some treatment procedures might be detailedwhile others are simple (Coleman, 2013).


Inconclusion, health care organizations are meant to offer verycritical services. Most importantly, they should save livesregardless of the financial status of the patient. However, fundingof these institutions is normally sensitive and complicated. Mostorganizations get their funds from the billing of patients. Thesefunds are in turn used to pay the medical practitioners and also buymedical equipment. The generation and management of funds in a healthcare institution should be handled in a manner that the services arenot affected.


Coleman,N. R. (2013). Challenges of integrating clinical andadministrative systems and its impact on the revenue cycle at theUniversity of California, Davis health system an academic and medicalinstitution (Order No. 1539610). Available from ABI/INFORMCollection. (1413311274). Retrieved fromhttp://search.proquest.com/docview/1413311274?accountid=45049

Edmondson,B., &amp Samet, R. (2015). Now or never: Making the commitment tovalue-based reimbursement. Frontiers of Health ServicesManagement, 32(2), 32-38. Retrieved fromhttp://search.proquest.com/docview/1781509743?accountid=45049

Singh,S. R., Wheeler, J., &amp Roden, K., (2012). Hospital financialmanagement: What is the link between revenue cycle management,profitability, and not-for-profit hospitals` ability to grow equity?Journal of Healthcare Management, 57(5), 325-39 discussion339-41. Retrieved fromhttp://search.proquest.com/docview/1095776503?accountid=45049