After a fairly predictable start, 2020’s unforeseen turn into a yearlong (and counting) pandemic created a torrent of financial and clinical challenges for hospitals and health systems. Reduced volume, increasing care complexities and an uncertain economy still remain in 2021 as hospitals continue working toward financial recovery. It won’t be easy. Moody’s Investor Services has predicted that public and nonprofit hospitals’ median absolute levels of operating cash flow will decline 10% to 15% this year. While the for-profit hospitals’ outlook is predicted to be stable for or in 2021, Moody clarifies that this “could change to negative if earnings decline or if there’s a marked decline in higher-paying commercial volume.”
With these driving factors, financial leaders must find ways to lower costs and increase profitability. This task may be untenable, though, as hospitals’ traditionally razor-thin operating margins were further decreased in 2020. New tools and technology to enable RCM improvements, therefore, have been out of the realm of possibility for most organizations. As hospitals remain in “do whatever it takes” mode, several revenue cycle management (RCM) strategies can help strengthen their financial outlook.
Revamp business office operations
It’s not flashy, but it’s important. Too easily, processes within the business office such as claims management and customer service will remain fundamentally unchanged. However, myriad factors such as value-based care, rising patient financial responsibility and evolving payer requirements have complicated business office operations, making it increasingly difficult for hospitals to collect what they’re owed.
In today’s pandemic environment, continuous improvement across the revenue cycle is critical, especially in high-touch patient areas like pre-collections and customer service. As patients face new complexities with their insurance, finances or care plan, they need compassionate and well-trained advocates who can foster a better understanding of their financial responsibilities and payment options.
Revenue cycle team members must be well-trained. In addition, they need standardized best practice processes to help eliminate inefficiencies and bottlenecks. Technology must work in concert with these processes, supporting the team to enable efficiency and give patients the best possible experience. Other areas such as A/R management and billing need the same attention. Evolving their workflow to accommodate trends such as value-based care and telehealth can have a big impact on profitability and cash flow, and so can supporting these workflows with the right technology.
Strengthen revenue integrity
The average 350-bed hospital has an overlooked revenue opportunity of up to $22 million according to The Advisory Board, but may be able to recover millions in reimbursement by stopping leakage. Through a strong revenue integrity program, a hospital can prevent lost revenue due to incomplete or unbilled procedures, inaccurate claims, underpayments or other errors that can be easy to make as well as overlook in an exceedingly complex reimbursement environment. Take steps to ensure your team understands the nuances of changing compliance requirements, COVID-19 coding and telehealth reimbursement regulations, such as monitoring CMS’ 20% add-on payment for inpatient COVID-19 cases.
Leverage resources to ensure your team has a clear understanding of patient versus payer responsibility for all cases, especially any that involve COVID-19, and make sure you’ve thoroughly optimized the chargemaster for compliance and accuracy. Evaluate your hospital’s potential cost of leakage and consider whether you’d benefit from a revenue integrity solution.
Focus on denial prevention
Year after year, revenue cycle leadership rank denials as a top concern because they’re both costly yet preventable, but providers rarely eradicate the problem. To move the needle and enable real improvement, gaining physicians’ laser-like focus is a necessity in our increasingly complex regulatory environment. For instance, it’s common knowledge that physician education regarding government and commercial payer clinical documentation requirements is essential. With physicians’ increasingly busy schedules, as well as their additional responsibilities related to reporting and other administrative tasks, getting them up to speed on the constantly evolving requirements can be difficult. Customized training designed for your physicians can help, as can remote utilization reviews and chart audits.
Many resources exist to help physicians and RCM staff keep up with compliance and billing information. However, the amount of time and effort required to stay abreast of this information can be daunting. For a major reduction in denials, consider leveraging a solution that leverages both technology and trusted physician experts to achieve compliance and minimize denials.
A radical next step beyond revenue cycle recovery: financial resilience
These three strategies – along with others such as focusing on value-based models – can each help hospitals achieve financial gains, but for one problem: hospital budgets haven’t recovered yet, and their leaders remain uncertain about when they will. With this situation, hospitals’ funding for solutions and technology to foster much-needed revenue cycle improvements is frequently limited or nil. Without the ability to invest in services and technology, how can hospitals achieve the financial gains that are essential in 2021? For organizations facing this situation, a full RCM partnership may be the answer.
Many savvy leaders are evaluating the RCM partnership model and finding it attractive in today’s environment. For hospitals and health systems that haven’t fully recovered from the pandemic, a model that puts the financial risk on the RCM partner’s shoulders can help them achieve results and recover ROI before any major capital outlay. In addition, this type of partnership can afford much broader and deeper improvements. You’ll not only reap benefits in areas like the business office and revenue integrity, but also across the entire revenue cycle. That’s because you’ll have a truly integrated, interconnected end-to-end workflow that enables far greater results than a point technology solution can deliver.
One final, especially important benefit of the RCM partnership: it can help hospitals go beyond financial recovery to financial resilience so they’re not only maintaining viability but thriving. This means hospitals can give patients exactly the experience they want, gain market share, increase their competitive advantage, and become more prepared for what’s next in an uncertain world.
Contact us for a review of your end-to-end revenue cycle so we can discuss which opportunities would yield the greatest benefit.
Author Bio: Nicole Shingler is Director, Revenue Cycle & Physician Advisory Services at R1.
