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Hospital Revenue

What is hospital revenue?

Hospital revenue is the money that a medical center generates from operations. Most hospital revenue comes from patient care services, including procedures, such as surgeries or diagnostic imaging, and billing for doctor appointments and services. Additional healthcare revenue may come from investments, gift shop or food sales, or donations.

The revenue a hospital generates helps to pay for its expenses, such as hospital employee salaries. The hospital administration’s ability to balance revenue and expenses plays a role in how financially successful the facility is likely to be.

Why is hospital revenue important to healthcare?

Hospital revenue is an important metric in healthcare because it can help healthcare organizations understand their financial health and performance. When hospital revenue exceeds expenses, administrators can theoretically invest in new services and assets.

Healthcare revenue is often in the form of reimbursement from health insurance payors for services and procedures. Payors include the federal government, through programs such as Medicare and Medicaid, as well as health insurance companies.

What impacts hospital revenue?

A hospital’s size and the type of services it provides are some of the most impactful elements to its revenue. Hospitals that have more beds can serve more patients and, therefore, generate more revenue. Insurance reimbursement can vary by the type of procedure, which can also impact hospital revenue. For example, a non-invasive diagnostic test is reimbursed less than a complicated heart surgery.

In addition, some government reimbursement programs may be based on the hospital’s quality performance, such as readmission rate penalties or value-based care initiatives.