How health systems are faring in a high-cost environment

Read Article: Modern Healthcare

Article Summary: While many health systems saw financial improvement in 2024, rising costs, payer denials, and uncertainty over supplemental payments pose significant challenges. Key financial risks include higher labor and supply costs, shrinking cash reserves at some systems, and increased reliance on Medicaid supplemental payments, which face potential cuts from Republican lawmakers.

The Risks:

  1. Payer Denial Revenue Disruptions: Health systems are facing a surge in payer denials, leading to delayed payments and growing accounts receivable balances, causing immediate financial strain. (Area: Revenue and Reimbursement) (Category: Reimbursement)

  2. Rising Labor and Supply Costs: Health systems are experiencing increased expenses for salaries, pharmaceuticals, and medical supplies due to inflation and higher patient volumes, putting pressure on margins. (Area: Human Resources) (Category: Economic Forces)

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