Health Care Accounting: Major Trends in Expenses and Revenues

Summative Assessment: Health Care Accounting
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Institution
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Analyze any trends in expenses and revenue that you see. Are they on target to meet budget goals?
My organization of choice is the University of Pennsylvania Health System. This assignment will be based on the audited reports and published budgetary planning of the organization. In the financial report for the University of Pennsylvania Health System for the two-three years ending 30th June 2022, there are some observations on revenue and expenses to be made. There has been a steady increase in total revenues and other support from $ 7.81 billion in 2020 to $8.68 billion in 2021 to $9.20 billion in 2022. This increase was mainly due to net patient service revenue from $6.81 billion in 2020 to $7.55 billion in 2021 to $8.10 billion in 2022. Other revenue and support increased from $994 million to $1.13 billion, then decreased slightly to $1.10 billion. There has been a healthy positive trend in the increase in revenue in the three years ending on June 30th, 2022.
Regarding expenses, salaries and wages increased from $ 3.40 billion in 2020 to $3.58 billion in 2021 to $4.04 billion in 2022. Supplies and other expenses increased from $2.8 billion in 2020 to $3.07 billion in 2021 to $3.44 billion in 2022. Employee benefits increased from $8.5 million in 2020 to $945.26 million to $1.01 billion. Depreciation and amortization, malpractice, and interest expenses all increased as well.
However, despite the increase in expenses, there was still an excess of revenue over expenses from operations of $147.48 million in 2022, although this was lower than the $610.88 million in 2021 and $242 million in 2020. Overall, the University of Pennsylvania Health System saw an increase in revenue and expenses in 2022 but maintained a positive excess of revenue over expenses. 2021 has posted the highest increase in net revenue. The spike experienced in 2021 can be attributed to the effects of COVID-19 on hospitalization and related income from services rendered.
The current trend shows the organization is on track to meet budgeted goals. The budget is in line with the established trend of increased revenue and increased expenses the organization has shown in the last few years.
How can your organization contain or reduce expenses without damaging services and quality of care?
Streamlining operations: Salaries are the highest expense for UPHS. This can be brought down by improving operations and reducing staff-related overheads. All human resources costs that can be automated or have high redundancy can be revisited to optimize the utility of this costly resource. Organizations can review their processes and identify areas where they can eliminate waste or duplication, reduce administrative burden, and optimize the use of resources.
Negotiating with vendors: Another major expense to the organization is payment to vendors of equipment and drugs. The management can renegotiate for better pricing because of the volumes it consumes. It can also create a competitive environment for vendors to compete for the best quality for the lowest price.
Leveraging technology: while the organization has invested in technology, at least through implementing a robust EHR system, other areas must be upgraded and updated to meet current and future needs. Some administrative costs can be avoided by investing in technology, i.e., revenue cycle management systems, etc. Organizations can leverage technology to automate manual processes, reduce paperwork, and increase efficiency. UPHS also needs to invest in data analytics to inform its strategic decisions and build its systems around data intelligence.
Improving supply chain management: an efficient supply chain reduces administrative overheads and increases reliability and efficiency. An organization might incur unnecessary expenses to cover delays or wastage caused by a poor supply chain network. Organizations can optimize their supply chain management to reduce waste and inefficiencies in the procurement and distribution of supplies.
Implementing preventative measures: Organizations can implement preventative measures to reduce the need for expensive interventions or treatments, such as implementing wellness programs, providing health education, and promoting healthy lifestyles.
Can your organization’s reimbursement strategy be improved to increas...