Hospitals Are Shifting to Outpatient Services What This Means for the Hospital Revenue Cycle

You can expect major changes to hospital billing this year thanks to the pandemic and shifts in patient behavior – but one of the most important that hospital revenue cycle and health system leaders should pay attention to is changes in use of outpatient services.

An analysis from the Guidehouse Center for Health Insights and Healthcare Financial Management Association (HFMA) addressed hospital and health system leaders including CEOs, CFOs, COOs, and other executives from 182 hospitals for insights into what they expect in the near future. It found that a full 95% of the executives surveyed expected higher outpatient volumes in 2023. As much as 40% of leaders expected increases of 10% or more.

But this shift isn’t happening on its own and those in charge of hospital coding and billing should pay attention. 41% of the leaders surveyed expected lower inpatient volumes at the same time, with 17% expecting that drop to be 10% or higher [1].

What’s Behind the Shift in Hospital Revenue Cycle

Hospitals and health systems have been navigating this flow of patients from inpatient to outpatient since the beginning of the COVID-19 pandemic – a period where patients were avoiding hospital emergency departments and many providers postponed or even canceled elective surgeries to slow the spread of the virus. HFMA has found that leaders believe that emergency department visits will increase, along with elective procedures, both at a rate of 10% or more. This is to be expected since, as things stand now, many providers still haven’t returned to pre-COVID patient volumes.

But many leaders will find themselves unprepared since they are still navigating issues with staffing and workforce problems. A full 96% of survey respondents said that their workforce issues are having a negative impact on growth strategy, and this impact isn’t minor. Among those who are having these issues, 62% report that the impact is significant. And while these problems are most prevalent on the clinical side, many are having issues on the administrative side also. Almost three out of four of the executives surveyed are looking for hospital revenue cycle, coding, and IT experts this year.

How to Adapt Hospital Billing to the Shift to Outpatient

As the “new normal” emerges, hospital revenue cycle leaders should be taking steps to adapt so that you stay ahead of the competition and in front of any future challenges you might face. 

Assess Your Current State in Hospital Billing

Now is the time to look at your current revenue cycle processes and determine your baseline before you begin to make any changes. For example, does your staff understand outpatient billing well? Will they need additional training? Do your current workflows meet the needs of increases in outpatient billing and coding?

Now is also an excellent time to determine whether your approach to measurement will be sufficient to evaluate any changes you make in your hospital revenue cycle staffing and procedures. You might want to consider creating new KPIs to make sure you have solid insights into your decisions around outpatient changes. 

Know that you’ll be doing the work of creating your own standards for using data to track outpatient claim statistics. There isn’t much of an industry standard and you’ll find considerable variation by payor and possibly even patient type, so a custom approach is best. 

Improving Your Clean Claim Rate

When deciding on goals and standards, your outpatient clean claim rate will be a useful place to start. Most hospital revenue cycle departments aim for around 95%, so if you aren’t hitting that number now, it’s a good time to start investigating ways to improve your processes and numbers. 

One of the first steps should be a focus on education and training, ensuring that your team on both the coding and billing sides understand what constitutes a clean claim for all payers on outpatient contracts. If you begin this process and realize that you have a significant amount of work to do to get your team up to the necessary standards, consider working with a medical billing and coding partner to supplement your hospital coding and billing needs. 

Dive Into Denial Management

During times of change like these, denial management only becomes more important. Having a clear strategy to measure, identify, prevent, and address denials will be immensely helpful in developing a hospital outpatient billing strategy that keeps cash flows healthy and creates a positive work environment for your hospital billers and coders

Know that denials are currently increasing and many hospitals and health systems are bleeding revenue as a result. But at the same time, the vast majority of denials are preventable. By appealing a majority of claims and aiming for a denials rate under 5% (or even lower), you can get a handle on outpatient billing issues before they even start. 

Stay dedicated to identifying and rectifying root causes, and filling in with outside support where needed, and you’ll walk into a future of increasing outpatient volumes with confidence. 

Consider Outsourcing Hospital Billing

Hospital leaders shouldn’t take on this type of unprecedented change alone. Many of your competitors are taking advantage of options in outsourced billing and coding to fill in gaps and create efficiencies that would be too difficult to achieve internally. They understand that outsourcing can stabilize revenue and reduce risk even while improving the patient experience

When you’re ready to take a fresh look at your approach to outpatient hospital billing and coding, we would love to share our expertise and insight. Just contact us here to get started



[1] J. LaPointe, “Hospital Execs Expect Greater Shift to Outpatient Care,” RevCycleIntelligence, 2 March 2023. Available:


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