Nearly 70% of healthcare executives currently face challenges due to increasing billing complexity, delayed managed care payments, decreasing reimbursement, or increasing debt. Chances are your organization is faced with at least two of these. It’s imperative to take a decisive approach to solving these types of cash flow impediments to maintain solvency. Despite the well-known elements of the revenue cycle, beginning with patient entry and ending with final reimbursement, most providers are simply not maximizing revenue and collecting receivables.
This three part blog series will take a deep dive into capabilities and best practices healthcare providers should consider in order to effectively to maximize cash flow.
- Part I: Revenue cycle value chain requirements to create tangible value from people, process, and technology.
- Part II: 10 effective revenue cycle management best practices to improve financial performance and patient satisfaction.
- Part III: A framework for developing and implementing a sustainable comprehensive revenue cycle management strategy supporting future growth.
Part I: The Revenue Cycle Value Chain Vis-à-Vis People, Process & Technology
Maintaining the status quo can be costly. As healthcare operating margins shrink, providers need to find efficient and innovative ways to capture and collect revenues. If your staff and procedures have been on autopilot too long, you’re probably leaving money on the table. However, this challenge poses the following question: how do you bring about change that will not disrupt or alienate your staff? Revenue problems rarely stem from a single source and are generally a combination of deficiencies in education and training, staffing levels, workflows and inadequate technology capabilities. The solution should focus on successful implementation of sustainable improvement opportunities that aim to increase the effectiveness of your people, processes and technology within each function of the revenue cycle.
People: The cornerstone of any successful organization is its people. In healthcare settings, it is critical to have the right staff in order to drive value throughout the revenue cycle. At a recent engagement, a client had enough foresight to realize that the central business office cannot be solely designed by the CFO alone and hired highly skilled and battle-tested staff into key positions.
But these types of changes can’t be unplanned. The importance of executive buy-in cannot be stressed enough and is fundamental in executing any operational change. As such, revenue cycle leaders play key roles in not only developing and implementing tactics to support high performance, but they also energize the organization around these tactics as well.
Process: High performing revenue cycles continuously make tangible improvements to their processes by monitoring and evaluating key financial metrics, including trend analysis and improvement strategies. A prime example is determining a patient’s insurance eligibility and benefits. The traditional method we’ve seen is to pick up the phone and call the health plan directly or visit the website. Neither option is efficient or effective and both have many downstream impacts to revenue (often caused by delayed payments due to incorrect eligibility verification on the front-end).
A more streamlined process is to automate the eligibility by standard HIPAA transactions, feeding directly into practice management systems, days ahead of scheduled appointments. Not only does this allow staff to focus on clinical activities, it also reduces backend rework.
Technology: Technology is only as useful as the manner in which you use it. Typically, just focusing on people and process improvements prior to applying automation can have immediate short-term revenue gains. However, technology complements the revenue cycle value chain as a long-term solution. For example, manual workflows can slow progress by introducing bottlenecks and inaccuracies.
Our experience shows most providers are often unaware of the amount of repetitive manual work that is done within their central business office and are surprised by the resource and monetary savings they realize by automating even the simplest tasks. By automating manual processes, the central business office is able to drive work faster to predefined work queues assigned to each business function. This in turn significantly impacts financial operations by generating clean, actionable information faster into the revenue cycle.
Effective revenue cycle management is a calculated balance between revenue coming in and spending required to generate healthy cash flow. Healthcare providers that find this equilibrium have the best chance for long-term revenue cycle success and scalability. In order to ensure your revenue cycle operates at its highest level, even during lean times, proper identification of the underlying problems are critical to your success. Optimizing financial performance requires paying attention to the details by ensuring the right people, processes and technologies are in place.
Once a framework is set and is being followed, it’s important to cyclically revisit it, as business environments continually change. Healthcare providers should also focus on implementing industry best practices to further boost efficiencies, reduce costs and improve overall patient satisfaction levels. Stay tuned for the next part of this blog series, which will detail how to deliver immediate ROI to your revenue cycle through a sequence of industry best practices.