Financial performance at hospitals and health systems has reached an all-time low. Operating expense growth continues to outpace revenue growth—with no end in sight. While leaders must rein in operating expenses, topline revenue growth remains a critical component of financial sustainability.

Unfortunately, inpatient volumes have stagnated and even healthy outpatient growth often fails to generate sufficient revenue to fill the gap. Hospital and health system leaders need to re-ignite the growth engine to complement cost reduction efforts and achieve sustainable margins.

Sustaining this level of revenue growth will require organizations to focus across the following three primary goals:

1. Reducing avoidable revenue erosion to ensure appropriate payment for each patient encounter
2. Increasing patient volumes to win market share in both the inpatient and outpatient settings
3. Exploring opportunities to diversify into new revenue streams

Our three-part Reigniting the Growth Engine series walks through ten strategies to guide hospital and health system leaders on the road to effective long-term revenue growth. The research explains the forces behind today’s margin challenge, provides a framework for comprehensive and efficient revenue growth, and features case studies of best-in-class organizations.

Part 1: Reducing Avoidable Revenue Erosion

The first step in meeting your revenue growth goals must be to reduce avoidable revenue erosion—ensuring you’re getting paid appropriately for every patient encounter. Organizations that can improve from 50th percentile performance to 70th or 90th percentile performance can potentially increase their rate of collections from earning 87 cents on every dollar billed to 91 or even 95 cents—an accretive benefit which would generate immediate revenue for the current patient population and amplify the value of all future volumes.

• 1. Elevate revenue cycle’s strategic value (p. 16)
• 2. Invest in dedicated support to engage physicians as revenue cycle partners (p. 17)
• 3. Build robust patient financial navigation platform (p. 18)
• 4. Restructure payer-provider relationship around shared objectives (p. 19)

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Part 2: Winning Increased Share of Lucrative Patient Volumes

Second, you should focus on growing your total number of lucrative patient volumes across both the inpatient and outpatient settings. If you simply maintain their current market share—even with organic growth on the outpatient side—you won’t even achieve one-third of your revenue goal. Organizations must focus on becoming more competitive to grow their market share.

Patient retention (p. 15)

• 5. Earn physician and consumer loyalty to win repeat business (p. 18)
• 6. Establish connective tissue between assets to streamline referrals (p. 20)

Patient acquisition (p. 23)

• 7. Communicate value proposition directly to retail consumers (p. 25)
• 8. Compete at the point of network assembly for wholesale purchasers (p. 26)

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Part 3: Diversifying Through New Revenue Streams

Finally, to close the revenue gap, organizations must look beyond traditional patient care revenue and explore opportunities to diversify into new revenue streams—including philanthropy, health plans, pharmacy, and more. These new revenue streams can offer substantial revenue potential, capitalize on existing strategic advantages, and advance the organization’s broader mission—but given the considerable risks involved, leaders must proceed carefully.

• 9. Reevaluate traditional opportunities for revenue diversification (p. 15)
• 10. Harness strategic advantages to capitalize on emerging revenue opportunities (p. 23)

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