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Lower reimbursement linked to sagging margins, healthcare CFOs say

March 19, 2024
Healthcare Finance News
A recent survey conducted by the Healthcare Financial Management Association and Eliciting Insights highlights that 84% of health systems identify lower reimbursement rates from payers as a primary cause of diminished operating margins. The survey further reveals the growing administrative challenges that health systems face, including a significant increase in payer denials since the pre-pandemic era and the consideration by 61% of health systems to drop Medicare Advantage plans due to these burdens. Additionally, rising labor costs are emphasized as a critical pressure point on margins, with nearly all CFOs pointing to nursing as a key area of labor shortage. The study suggests that while health systems are employing traditional cost-cutting measures, they are also exploring other strategies such as reducing capital investments and outsourcing revenue cycle roles to navigate financial constraints. Despite some slight improvements in operating margins post-pandemic, the increased difficulty in working with Medicare Advantage plans and the higher denial rates pose ongoing challenges for revenue cycle teams, underlining the need for enhanced revenue management and denial mitigation strategies to improve financial health.
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