According to an S&P Global Ratings report released on August 7, 2024, median days cash on hand for U.S. hospitals and health systems dipped to a 10-year low.
While the upper half of U.S.-based nonprofit acute healthcare providers reported an average of 292 days, the concern is with those in the lower half, who reported 128 days on average. As a result of the lower cash on hand, the report noted that an uptick is expected in borrowing activity for many organizations in 2024.
The pressure on cash on hand continues in 2024, with elevated operating expenses coupled with limited operating revenue growth. Cash on hand is essential for hospitals and health systems’ long-term success, as it is vital for investment in new or the maintenance of specialized equipment that can generate higher revenues. It’s also needed for investment in higher-margin specialty practices or to support lower-margin services that are fundamental to the communities served.
How Withum Can Help?
One way to improve cash on hand is to evaluate the revenue cycle for potential leakage. At Withum, we offer various solutions to capture this leakage. A full revenue cycle assessment is a place to start. With a focus on workflow, processes, and technology, we can provide recommendations and observations of areas that need improvement to achieve industry best practices.
Another opportunity is denial management. Every payor denies for different reasons depending on the service being provided. It is critical to understand these at a granular level and to create process and workflow changes to minimize the number of denials and immediately provide a positive impact on cashflow. Lastly, we look at underpayments, specifically for Medicare, as you are allowed a four-year look back to adjust a billed claim if it was not billed accurately, and there is an opportunity to file an adjusted claim that will provide additional cashflow and assure you are being paid accurately for the service that was provided.
Author: James Trubenbach-Byrne, CPA | [email protected]
Contact Us
Contact a member of Withum’s Healthcare Advisory Services Team with any questions or assistance with your organization’s cash on hand.
