Consultant Finds Hospital Could be Leaving Millions on the Table
A consulting firm hired by McDonough District Hospital has found that poor revenue cycle management is costing the hospital roughly $20 million a year—money that should be collected from insurance companies and patients but instead is being lost to manual processes, weak controls, and leadership that doesn’t understand the work.
The assessment, presented to the board Monday by RSM consultants Michael Brown and Brett Kleebauer, recommends outsourcing most billing and collections functions. The hospital currently collects only 36% of gross revenue when it should be collecting 43%, according to contract modeling done by RSM. But that 43% figure is conservative. The actual potential is likely higher.
“You’re writing off quite a bit more than you’re collecting in cash,” said Greg Bauer, the RSM consultant who conducted the assessment. “It’s costing you eight dollars and thirty-three cents for every hundred dollars you’re collecting. That’s very, very high. It should not be that.”
The gap between what the hospital collects now and what it should be collecting translates to $16–17 million annually in uncollected revenue, plus another $3–4 million in inflated collection costs.
