In today’s uncertain economic climate, most hospitals and healthcare systems are very interested in improving performance while embracing innovation to improve the functionality of their revenue cycle.
The current trends suggest that hospitals lose 3 to 5 percent of their net sales from inadequate revenue cycle management processes and procedures. Gathering revenue from all payer sources has become of paramount importance for hospitals to thrive in our difficult economy and in some cases remain in business. The latest business data indicates that a typical mid-sized hospital could experience an approximate revenue leak from $ 4.5 million to over $ 9 million each year.
The largest amounts of revenue loss are a direct result of poor data capture at the front end of the revenue cycle and operational inefficiencies everywhere. A smaller but still significant amount of losses come from unidentified or undiscovered sources of government and commercial revenue that end up in the self-paying financial class and ultimately go uncollected. Although some of these unidentified insurance accounts may eventually be collected later, the result of misallocation of financial class of insurance coverage results in an unnecessary increase in AR days.
Bad debts continue to rise as patients take on greater risk by choosing higher deductible plans to reduce their overall costs. Even with the introduction of health care reform, many patients are forced to insure themselves or go without insurance together.
The challenges of collecting self-pay accounts continue to increase as patients become more savvy consumers. In some cases, patients choose hospitals that have the spottiest collection and continue a repeated cycle of receiving services without paying for them.
Apart from the collection challenges of self-payment, hospitals are plagued by the rising costs and financial consequences of performing revenue cycle activities such as handling refusals and refusals of insurance payments, identifying lost fees, late payments, underpayments and the hidden rework costs.
Healthcare leaders are looking for cost-effective, comprehensive strategies and technology solutions that complement their current systems and processes and provide the business and operational intelligence data needed to optimize financial and operational performance.
Why do some hospitals experience revenue leaks? Why is it that some categories of revenue loss can be quantified but there is no immediate fix on the site? Generally, providers are challenged to keep up and consistently meet complex and rapidly changing payer permit requirements, medical necessity, and timely filing limits. This is exacerbated by the rise in self-pay patients and the inefficient flow of data that supports the collection of these accounts. To operate efficiently and effectively, it is user-friendly systems with good control and fluid communication across the company.
Many hospitals have made great strides in developing new processes and procedures to improve and positively impact the earnings cycle’s results. The challenge for these facilities is to maintain the long-term economic benefits. This is more difficult than meets the eye.
It requires skilled and trained personnel to perform many of the complex and difficult manual processes developed over time. Maintaining a highly trained workforce and managing performance over time is no easy task. It requires strong leadership and minimal turnover to sustain the performance gains of procedural and process-oriented strategies.
Providers are starting to leverage new ideas and specific solutions to improve and maintain the highest revenue cycle performance. In short, the leading practice trend is to operate the revenue cycle based on advanced technology that provides operational business information. Having access to information is only part of the solution; the key influences positive change with the information.
The best operators know where they are in terms of performance at any given time. Accessing this level of information in a manual environment is practically impossible. Creating the ability to make real-time decisions is required in today’s fast-paced business and health climate. New solutions now make it possible and affordable to keep your finger on the pulse of revenue cycle metrics and KPIs by identifying negative trends before turning into performance issues.
Relying on retrospective reports is like reading Sunday’s newspaper on Monday. You already know what happened and it’s too late to change anything. The best-performing organizations know that the value of reporting is only as good as the user’s ability to act on the information. Unfortunately, due to the constraints and flexibility of most health information systems, healthcare organizations are forced to operate in a retrospective state rather than act in real time. Retrospective actions do not allow adjustments until problems become fully developed and affect performance.
As capital markets tighten and budgets continue to narrow, healthcare healthcare executives are looking for non-capital-intensive solutions to help them manage their business through sustainable, flexible and adaptable technologies.
Current health information systems do not offer the operational or business intelligence capabilities needed to manage quality and workflow across the enterprise. Many external vendors have tried to solve this ongoing dilemma by providing stopgap solutions that address puzzles; However, there are minimal options for a true “end-to-end” solution that is flexible and expandable enough to provide the necessary support – until now.
IT and financial leaders should look for an operational business survey solution that minimizes the need to add more staff to support, such as an ASP model, and a flexible role-based system that includes easy addition and modification of business rules such as marking, tracking and managing accounts through a work list. This proactive approach to workflow management prioritizes key workflow elements beginning with physician orders, scheduling, account pre-registration.
Once operational business intelligence tools are in place, revenue cycle managers must continuously benchmark performance metrics. Such performance-based comparative practices can be found on various resources, such as HARA (Hospital Accounts Receivable Analysis Reports) produced by Aspen Publisher or HFMA MAP KEYS. When benchmarking performance against national or regional data, goals must be set by considering all factors, including adjustments to unique circumstances, such as different demographics, major employer layoffs, or plant closures. Stakeholders should set goals as “better than their best” but credible and aim for performance in the top 10 percent of all track by operational categories.
Once performance benchmarks have been established and approved by top management, revenue cycle managers must communicate and publish their results on a daily, weekly or monthly basis, regardless of the results.
When using operational business information, there should be no surprises in terms of operational metrics. With the best of operational business intelligence systems, race-trending data is available in real-time, therefore line staff, supervisors, managers, directors and senior management should have their finger on the pulse of the revenue cycle at all times. Once in place, performance metric tracking should be used as an integral part of a continuous improvement process.