Patient admissions fuel revenue growth at nonprofit hospitals

Other factors leading to a stronger financial picture include technological advances and better payment collection systems.

By Cheryl Jackson, amednews staff. Sept. 2, 2002.

Increases in patient volume and better contracts with payers are keeping the nation's nonprofit hospitals on stable financial ground.

Population growth, higher hospital use rates and technological advances increased patient volume at nonprofit hospitals last year, according to "Not-for-Profit Healthcare 2002, Outlook and Medians," published by Moody's Investor Services.

The average nonprofit hospital had a 3% growth in admissions in 2001. The median revenue growth was 9% in 2001, the first time that figure had surpassed the median expense growth in years.

Fitch Ratings also reported seeing increases in patient volume and rising reimbursement rates at hospitals, although lower rate increases for next year are expected, said Fitch director John Wells.

Hospitals are instituting better systems for collecting payments, Wells said.

"The revenue cycle management has helped hospitals to improve days in accounts receivable and that debt expense seems to be declining," Wells said. "It's just cleaning up processes and improving billing and so forth and following through on a lot of outstanding bills. It's a lot of blocking and tackling. Just fundamentals, I think."

Hospitals also are trying to limit their use of temporary and agency nurses, who are more costly that those on staff, by offering competitive wages and reimbursement for education. Shedding physician practices or renegotiating physician contracts also has helped the facilities become more profitable, Wells said.

"Trying to improve relations with physicians is an ongoing thing," Wells said. "The way that hospitals are attacking that issue is to try and have the best technology that makes that job easier."