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.