Community Hospital’s Financial Management

Identifying the Problem

The community hospital experienced a reduction in revenue, which was more pronounced in the outpatient department. The hospital had experienced a 15% drop in revenue compared to the previous year. The problem was closely related to both administrative and system issues. There seemed to be a problem with the IT system, especially the billing cycle. The computer system glitches made it impossible to generate charges.

Besides, there was a gap between submitting claims and receiving payments. These are part of medical records based on diagnosis and treatment codes. When codes for injectable and infusible drugs could not be generated, errors could occur. Another possible error that could cause the 15% loss of revenue was the clerical error, which had a close connection to the billing and coding system in the outpatient department (Nowicki, 2015).

One of the ways to identify the problem was by comparing the last year’s revenue to the current one. It was achievable by running the revenue and usage summary report in comparison to those of the previous years. The approach would be the first step in determining the discrepancies in the billing system. Another possible cause of the reduction in the revenue was the use of drugs without codes. However, it could also be due to errors in administrative coding. For instance, the injectable and infusible drugs were up but procedural records were unavailable. Besides, the codes of injectable and infusible drugs were a way of that of the previous year. Procedural codes were missing in the bundled payment (Nowicki, 2015). The procedures listed were without the products attached to them.

Possible Solutions

The Medicare system needs both procedure and diagnostic codes to meet the regulatory requirements of HIPAA. To achieve this, appropriate machines should be used. First, it was necessary to improve the software and IT systems to capture the stated errors. Also, the hospital can increase the training and percentage of the claims reviewed to improve its ability to detect errors. Secondly, the system could adopt some of the HIPAA-approved cloud-based applications to allow for telecommunication services (Nowicki, 2015). Consequently, space for documentation is saved for other purposes.


Nowicki, M. (2015). Introduction to the financial management of healthcare organizations (6th ed.). Chicago, IL: Health Administration Press.