What is the difference between gross revenue and net revenue in healthcare?

The distinction between gross revenue and net revenue is fundamental in understanding healthcare finance. Gross revenue represents the total amount billed for services before any adjustments are made. This figure acts as the starting point for revenue calculations, encompassing all charges, whether or not they are ultimately collected.

Net revenue, on the other hand, reflects the actual amount received by the healthcare provider after accounting for various adjustments, such as contractual allowances, discounts, and bad debts. This is the figure that ultimately impacts the financial health of the organization, as it represents the real income obtainable from services rendered.

By understanding that gross revenue is about the total billed amount and that net revenue is what is finally received, one can appreciate the implications these figures have on revenue cycle management, budgeting, and financial planning within the healthcare sector. This clarity is important for evaluating the financial performance of a healthcare organization and ensuring efficient revenue cycle operations.