Assignment Revenue Management

Running head: REVENUE MANAGEMENT 1
Revenue Management In A Health Care Organization
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REVENUE MANAGEMENT 2
Introduction
Hospitals and other healthcare facilities are providers’ of health services and treating different
types of patients. Finance is required to provide these treatment services and to be able to obtain
medicine for patients. The administrative, the physicians and other health works are supposed to
be paid. Therefore, the healthcare organizations must find the way of generating revenues and
the management of that revenue to facilitate its services. Hence, this research focuses on sources
of income in health care organization, control of the tax and challenges facing the management
of the revenues in health care organizations (Eldenburg, 2014).
Sources of revenue in a Health Care Organization
Government revenues
The government obtains its revenue from the tax it does collect from citizens and among
other sources. The government is now able to provide income for healthcare organizations with
the revenue it has received. The government provides the revenue for healthcare organizations
regarding grants, subsidies and health care programs like Medicare and Medicaid. Medicare
includes Medicare Advantage and Medicare prescription drug plans (Zelman, 2015).
Direct payment by patients
Majority of revenue in healthcare organizations come from the patients treated in the
hospitals and other healthcare facilities. Patients pay money from their pockets to these
healthcare facilities when they go to seek services. The rate set by the healthcare facility largely
determines the amount of revenue that that healthcare organization will get. The patients pay for
the medical services they receive in the hospitals and other health facilities. Therefore, the

REVENUE MANAGEMENT 3
healthcare organizations are focusing on fixing rates of lower percentages to reduce the amount
of money paid by the patients (Zelman, 2015).
Private donations
Corporations and individuals also donate finances to health care facilities. The
administration of the healthcare facility can lobby either the donations or those individual and
organizations may give the contributions when they are satisfied and believe in the services
being the offer by that particular healthcare facility. Even though this is a source of revenue but it
is unreliable since the donors can change with time and start donating little amount or also end
their donation (Eldenburg, 2014).
Premiums
The insurance companies provide premiums that provide health care insurance to the
people. These insurance companies believe that people will be healthier than they will be sick;
hence, they earn more premiums from people than what they pay out. Therefore, the insurance
company pays the medical providers finances, which they have obtained from the people
(Griffith, 2014).
Rates negotiation with payers
Negotiating with payers is one of the practices that healthcare providers ensure is
achieved well to have revenue for the healthcare facility. Therefore, the healthcare organizations
need to have adequate negotiations with payers that will enable them to have a sustainable source
of income. The healthcare organization should conduct cost analysis so that they can know the
cost of delivering quality healthcare and understand current market trends. A group evaluates to