Medassets' web-based technology and consulting solutions to improve profitability of hospitals

Aug 28 2009

In today’s tough economic climate, the majority of U.S. hospitals are challenged to generate low single-digit profit margins given the impact of rising supply costs, variances in supply utilization, and reduced revenue due to changes in patient volumes and payor reimbursement. To address these existing challenges, MedAssets, Inc. (NASDAQ: MDAS) is helping hospitals develop defensible pricing strategies through Web-based technology and consulting solutions that improve profitability and offer pricing transparency for consumers choosing where to spend their healthcare dollars.

For healthcare providers, the need for defensible pricing strategies is amplified by a shift toward consumer responsibility in paying for their healthcare services, along with various ways hospitals price supplies and procedures using mark-ups or across-the-board increases versus actual costs. The result for providers using these diverse pricing methodologies in a complex billing environment is margin pressure and often increased rates of denials. To counter these trends, MedAssets’ defensible pricing initiatives help hospitals track costs and charges, enhance coding accuracy and identify supply items not linked to charge codes.

One example of a health system developing a successful defensible pricing strategy is Orlando Health, a Central Florida-based health system with more than $1.5 billion in annual revenue, serving patients through eight facilities. Orlando Health determined it needed to build a consistent pricing model to improve profitability and transparency, choosing MedAssets’ charge description master (CDM) solutions, pricing services and CrossWalk to address its defensible pricing challenges. Over the course of two years, the health system implemented a standardized pricing methodology for imaging, supply devices and radiopharmaceuticals, which has given executives the ability to generate multi-year forecasts. Through a disciplined focus on pricing and revenue integrity, Orlando Health has realized $57 million in increased net revenue over the past three years.

“By staying focused, we have been able to see quantifiable financial results as well as increased visibility and improved communication across our organization,” said Teresa Loomis, RN, BSN, corporate director, revenue integrity, Orlando Health. “We now are enjoying increased efficiencies, defensibilities and consistency within our CDM.”

Another example is Bon Secours Health System, a $2.4 billion not-for-profit Catholic health system headquartered in Marriottsville, Md., which serves patients in seven states on the East Coast with 29 hospitals and inpatient facilities, as well as numerous home care and hospice programs. Bon Secours wanted to standardize and be able to leverage its pricing strategy across the health system; eliminating charging disparity. Using MedAssets’ CrossWalk^® solution to link supply chain and revenue cycle information through the item master and charge description master, Bon Secours has been able to capture high-cost supply items that previously were not being charged. The health system’s compliance and billing risk has been reduced by millions of dollars as result of accurately identifying chargeable items.

According to John Whitesel, Senior Financial Consultant, Bon Secours, “Linking our supply chain and revenue cycle data was one of the first steps to creating a defensible price strategy. Once we were able to identify areas where we were charging less than cost, we began to fix the issue and start developing the appropriate pricing structure.”

“From MedAssets’ perspective, pricing transparency requires defensibility, and is an important, timely topic for healthcare providers,” said D.T. Nguyen, President, Revenue Cycle Management, MedAssets. “We apply a proven method and customized road map that helps our customers establish consistent, quantifiable and defensible pricing strategies to address their unique needs, and these evidence-based tactics have delivered measurable financial improvement.”

To learn how Orlando Health and Bon Secours achieved great results, visit the Defensible Pricing page on MedAssets.com. Fiscal year 2010 pricing initiatives need to be developed and implemented now. For more information on MedAssets’ Pricing Solutions, which analyze your current pricing, make recommendations and help you define optimal, yet defensible, pricing for improved financial performance, visit Pricing Solutions.