How patients select health plans, choose their health care providers and pay their health care bills is undergoing dramatic change in the health care delivery system in the U.S. To effectively manage the financial impact of that change, hospitals must upgrade their revenue cycle management capabilities.
Here are five ways I believe hospitals can elevate their revenue cycle game while at the same time improving the patient experience and patient engagement with the payment process.
Know your strengths and weaknesses and seek out best practices
An organization may not have internal expertise regarding revenue cycle management and medical coding and billing for medical services, and that's ok. But a hospital does need to be able to analyze its operations and identify areas of opportunity for improvement. Even if the organization has a healthy balance sheet and great margins, it can always learn, always do things more effectively, always do things more efficiently and always get better.
So where should finance leaders look to understand their strengths, weaknesses and opportunities for improvement? I would recommend three sources:
Peer organizations: Leaders should look to their peer organizations and compare their revenue cycle performance with those organizations. What are they doing differently in terms of staff, expertise, process and technology that produce enviable metrics on revenue cycle key performance indicators?
Professional organizations: Leaders should turn to their professional organizations and membership societies for guidance on best practices for healthcare revenue cycle management and medical billing and collection practices. Those groups also offer multiple educational opportunities for finance staff members.
Revenue cycle vendors: Leaders should consult with their revenue cycle management vendors for tips to success, subject matter expertise and advice. Vendors know what's working with all their clients. Partnering with a vendor and tapping into their real-time knowledge will pay big dividends.
Design and implement a revenue cycle scorecard to regularly track performance
Organizations that want to improve their revenue cycle management performance must realize that simply monitoring performance by spot checking traditional Key Performance Indicators (KPIs) like days in accounts receivable isn't enough. Instead, they should consider using advanced data analytics, or big data, to generate actionable insights to improve revenue cycle management performance. The most effective way to do that is displaying traditional and custom KPIs on a digital dashboard. That dashboard should present that KPI data in a number of ways:
1. Where those revenue cycle KPIs for the organization are at any point in time
2. How those revenue cycle KPIs for the organization compare with industry benchmarks
3. How those revenue cycle KPIs for the organization are trending over time
That presentation tells hospital leadership not just where its revenue cycle performance is at the moment but what direction it's trending. Daily dashboards also flag trouble spots - like an increase in the denial rate for a particular medical procedure - that require additional attention and additional staff training on coding and documentation. Additionally, the dashboard should be integrated with other IS systems at the hospital, enabling it to capture events that can impact an organization's revenue cycle KPIs.
Create a standing revenue cycle committee with key stakeholders and clinical champions
The comprehensive revenue cycle performance dashboard I described is only as effective as the right people using it to make data-driven decisions. The core group or focus group of the right people should actively participate in a standing revenue cycle management committee at the provider organization. The committee should include leaders from the finance department and every department that ultimately is influenced and impacted by revenue cycle performance - namely clinicians. It's essential to have that clinical representation on the revenue cycle management committee because of the growth in performance-based and value-based reimbursement contracts that set payment rates based on meeting specific clinical performance measures.
In terms of operations, the multidisciplinary revenue cycle management committee should:
1. Give access to the dashboard to each committee member
2. Send automated links to the dashboard via e-mail or secure text message to committee members on a regular basis
3. Hold monthly roundtables to discuss and brainstorm areas that need improvement
4. Create subcommittee task forces to address specific revenue cycle areas that need improvement like prior-authorization denials or ICD-10 medical coding issues
Optimize and fill gaps in existing revenue cycle capabilities
The backbone of any effort to improve healthcare revenue cycle management performance is the ability to leverage technology and services that are both flexible and scalable given the growth in the number and complexity of hospitals' contracts with payers and the increasing need to work directly with patients regarding their financial responsibility. Consequently, I would recommend that hospitals focus their attention on three targets to improve overall revenue cycle capabilities:
Fill gaps with new technologies or services: Leaders should fill gaps in existing revenue cycle capabilities by acquiring new technologies or engaging service vendors to provide support. The research firm MarketsandMarkets projected that the global market for health care revenue cycle management solutions will reach $7.1 billion by 2020.1 Similarly, according to Black Book Market Research, more than two thirds of hospital CFOs seek to outsource some or all of their revenue cycle by 2017.2 Such growth reflects the demand for solutions that help organizations keep pace with the dramatic changes in the way care is priced, billed and reimbursed.
Optimize existing technologies: Leaders should optimize existing technologies to take full advantage of their revenue cycle capabilities because many of them don't take full advantage of the available applications in their current revenue cycle management systems. For example, only 44 percent of the hospitals recently surveyed by HIMSS Analytics said they use a vendor-provided claim denial management solution.3
Explore patient-centric technologies and services: Leaders should explore new patient-centric solutions that make the medical billing and collection process transparent and easy to use for patients. Such solutions include applications that help patients determine out-of-pocket cost estimates, call centers that can improve scheduling, referral management, or work with patients on financing and payment plans and kiosks or online portals that allow patients to validate demographic information, look up their covered benefits and make payments electronically. Outsourcing the entire healthcare call center activities can not only help reduce expenses but improve overall patient satisfaction.
Set revenue cycle goals and continuously measure performance against those goals
It's said that you can't improve what you don't measure, and that's certainly true of healthcare revenue cycle management. Using industry expertise, technology, scorecards and committees to collect, report and analyze revenue cycle KPIs all are important but only if hospital leaders know where they want to go with those KPIs. Here's what I would recommend:
1. Leaders should set their expectations and goals for each of the KPIs at the beginning of their fiscal year, and they should be on everyone's scorecard.
2. Leaders should set their expectations and goals for each of the KPIs for each year over a five-year period.
3. Key stakeholders should be monitoring the KPIs daily with real-time access to the dashboard.
4. Senior management should monitor the progress and hold responsible departments and teams accountable for the results.
The goals should be realistic, and reaching them won't happen overnight. Hospitals that take that measured approach will see a gradual and steady improvement in those KPIs. Organizations that do so are setting themselves up for healthcare revenue cycle management success as industry changes accelerate. They need to realize that what may not be a challenge today may very well become a challenge in the not too distant future. Be an active change agent in the organization.
Related: Learn about McKesson's Revenue Cycle Management Services.