Market Data Is Essential to Strategic Revenue Growth for Hospitals and Health Systems

Providers are highly focused on top line revenue and margin challenges from rising costs, inflation, physician shortages and an aging population that requires more complex care.

Providers are trying to deliver cost-effective care, while managing financial challenges. Growth and financial stability are key areas of focus.  

Healthcare provider organizations have gotten through the high labor costs from the pandemic, but now face cost of care exceeding the level of reimbursements.¹ Commercial insurance is estimated to pay on average ~190% of the traditional Medicare rate². Medicaid reimbursement is nearly 30% lower than Medicare on average, and up to 50% lower for some services.³ The shift in membership across plan types requires providers to re-evaluate their revenue strategies, operating income targets, and expense targets. All impacting financial planning. 

Healthcare provider organizations work hard to deliver care their patients need. They can optimize the revenue cycle, but ultimately, these organizations must find new opportunities for growth. It’s a matter of viability. 

To get a competitive edge on competition, you need to know what they are doing. Market data insights are critical to get a “market view”. De-identified claims can help you get the insights you need to make informed strategic decisions. You can see individual providers and institutions, and their real-life relationships.  

Referral leakage can be as high as 55-65% for a health system. That means for a hospital with 100 affiliated providers, it could cost as much as $97M per year.⁴

Market data insights can help you: 

• Understand market share and competition 
• Attract new patients and drive referral volumes 
• Determine reimbursement rates compared to competitors 

Identify potential expansion services inside the hospital 

You can also use market insights when you are considering expanding outside the hospital. If you are considering expanding by adding a facility analysis is necessary to determine the busiest practitioners by specialty to reach out to each and determine the interest level. 

De-identified claims data gives you an unbiased view and gives you competitive intelligence you need to expand. If you are looking for potential new streams for revenue, you can determine by procedure volumes, referrals and reimbursement rates what might be a good area for growth. 

Have a goal of increasing your outpatient volumes because you recently built an ambulatory surgical center, analyze referrals by care setting to find potential physicians to target. 

Depending on the source, the average hospital loses 10-30 percent of their revenue to patient referral leakage, which causes $200 to $500 million in losses per year.⁵ Physician referrals are an important part of revenue streams. How much physician referral leakage are you experiencing? It’s important to monitor what is going out of network. Are your network physicians potentially referring outside the network. Market data insights can tell you all that and inform your referral management strategy.  

Read the “How Hospitals and Health Systems Use Market Data to Make Informed Strategic Decisions” ebook to learn how you can use data to develop innovative strategy. 

References:

[1] Hospitals Face Financial Pressures as Costs of Caring Continue to Surge,https://www.aha.org/news/perspective/2024-05-10-hospitals-face-financial-pressures-costs-caring-continue-surge#:~:text=The%20AHA's%20new%20Costs%20of,of%20reimbursement%20%E2%80%A6%20by%20a%20lot. 

[2] Commercial reimbursement benchmarking (milliman.com),  
https://www.milliman.com/en/insight/commercial-reimbursement-benchmarking/ 

[3] How Differences in Medicaid, Medicare, and Commercial Health Insurance Payment Rates Impact Access, Health Equity, and Cost | Commonwealth Fund,  
https://www.commonwealthfund.org/blog/2022/how-differences-medicaid-medicare-and-commercial-health-insurance-payment-rates-impact 

[4] 30 Healthcare Statistics That Keep Hospital Executives Up at Night,https://getreferralmd.com/30-healthcare-statistics-keep-hospital-executives-night/