Correspondence: Robert Christenson, PROS¹ Revenue Management, 3100 Main Street, Suit 900, Houston, TX 77002, USA. Tel: +1 713 335 5151; E-mail: info@prosrm.com

¹Robert Christenson is Director Business Development Healthcare at PROS Pricing Solutions, where he has overseen partnerships and projects since PROS began to offer science-based pricing solutions in the healthcare vertical. To date, he has helped healthcare clients' needs in the areas of managed care contract analysis/price optimisation and charge master price optimisation in several different market areas. Prior to PROS, he worked in the oil and gas industry creating partnerships with some of the largest companies in the world such as Chevron and Shell to help automate and enhance operations in the areas of process control. Rob has a bachelors of science degree in Chemical Engineering from Texas A&M University.

Received 29 March 2006.

Abstract

Optimisation of the charge master prices is an effective way to improve the net revenues of a hospital and is a fundamental part of strategic pricing. Today, scientific charge master optimisation (also known as a rate-opt) must be considered a mandatory activity, not only for maximising net revenues (typically at least 20 per cent greater than other techniques) but also to ensure government compliance, managed care contract compliance, and fair treatment of the uninsured, while providing transparency into the pricing process. Unfortunately, when improperly done, a rate-opt will not only fail to achieve the desired goals, but it will frustrate department directors and the finance group. This article discusses best practices for performing a successful science-based rate-opt, a highly leveraged tool in a hospital's financial inventory.