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Components of Healthcare Revenue Variances Part 2

The post titled Components of Healthcare Revenue Variances identifies a series of high-level gross and net revenue components of change. Of the five components listed (fees, workdays, volume, payer mix, and acuity), three of the five components can be calculated using "pure volume".

The term "pure volume" is a result of how data flows across most revenue systems. Most revenue systems have the ability to report only three of the five components above - volume, acuity, and revenue. For example, if a patient is seen for a normal consultation in a clinic (prefessional) setting, the physician will bill a volume of one (for one consultation performed), an RVU (acuity factor) of 2.33 (a productivity factor relating to the time and complexity of the consultation performed), and revenue of $150 (the amount billed for the consultation performed). The work day and payer mix components are actually a subgroup of volume and must be calculated.

Below is a simple model that illustrates how those variance components might be broken out:

image

The yellow shaded cells are inputs. The five variance components are listed in column B. The actual components that you can get from a system are listed across in row two.

Column D shows that the volume component extracted from the revenue system can actually be broken down into three subcomponents - pure volume, work days, and payer mix.



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