Revenue Forecasting
Revenue forecasting can be straightforward if only gross revenue is considered. The revenue associated with each drug is the charge per dose multiplied by the number of doses. Net revenue considers the remainder of the revenue cycle—discounts, allowances, denials, and unpaid charges. A simple percentage discount can be applied to estimate the actual revenue that will be collected. This discount rate can be determined by the hospital’s finance office. Improvements in recovery and reimbursement should result in a lower discount rate. As system improvements are made to improve reimbursement, this "discount rate" should be recalculated. Most hospitals recalculate the discount rate at least once a year when preparing the annual budget.