Mergers + Acquisitions: Is Your Chargemaster Strategy Sound?

Expansion—through mergers, acquisitions, joint ventures and other strategic partnerships—has become an important tool in a hospital’s strategic wheelhouse. With hospital mergers and acquisitions steadily on the rise, it is increasingly important to understand the chargemaster’s vital role when it comes to the success of such ventures. As your footprint expands to encompass the entire continuum of care, possibly spanning different EMR and patient accounting/billing systems, how do you ensure your chargemaster strategy is sound and consistent?

We break this question into two parts—soundness and consistency—for good reasons:

First, in an era of increased public price scrutiny, hospital CFOs must ensure that their chargemasters are defensible and can be clearly explained to outside observers, auditors and patients.

Second, mergers, acquisitions and other affiliations often bring organizations that may have very different pricing and coding methodologies, practices and strategies under a single umbrella.

Healthcare providers can and should develop and implement sound, consistent and defensible pricing strategies that are sensitive to market conditions and best practice methodologies while achieving net revenue objectives.

To do so, you must:

  • Possess

    Possess a thorough understanding of the basis of your line-item markups and charges

  • Determine

    Determine appropriate degrees of transparency

  • Understand

    Understand local and regional market forces

  • Develop

    Develop and implement effective gross and net revenue modeling tools

  • Conduct

    Conduct regular evaluations of your pricing strategy

Furthermore, in order to ensure optimum integrity of a health system’s decision support system, it is essential that consistent and synchronized coding across all entities exists in the chargemaster for like items. Maintaining a corporate chargemaster is insufficient if each entity has the flexibility to alter the HCPCS, revenue code and modifier assignment or map unlike items to the chargemaster codes.

Finally, it is also important to consider when developing rational and defensible pricing that chargemaster prices must not only be rational in comparison to market data, fee schedules and unit cost, but that they must remain consistent in relation to other related procedures. For example, it is important that procedures with and without contrast, or level 1, 2, 3, etc. procedures, or unilateral and bilateral items in your CDM reflect a reasonable relative value relationship to each other.

To learn more about Panacea’s complete set of chargemaster solutions, click here.