5 thoughts on revenue cycle management
Revenue cycle is the financial pulse of any business, and how those processes are managed determines that business's financial health. Healthcare is no exception, but the dramatic changes in the industry are altering how its leaders will approach the revenue cycle. Here are five trends that are reshaping the way healthcare revenue cycle management will function.
1. Patient responsibility. Whether patients are purchasing health plans from the exchanges or covered under employee-sponsored plans, higher deductibles are becoming the general rule, rather than the exception. Increased financial responsibility may be falling on patients' shoulders, but it is ultimately up to providers to ensure those responsibilities are met. Insurance verification and upfront collections, while perhaps priorities in the past, will only grow in importance. "The chance of collection drops by 50 percent once the patient is seen," says Michael Orseno, director of revenue cycle management with Regent Surgical Health. "Focus on hiring competent staff to obtain the correct insurance information and collect out-of-pocket costs up front. It is worth every dollar to pay competent staff to collect every dollar you are owed."
Front-end collections are inextricably linked with customer service. Providers that achieve maximum upfront collections will be those that invest in the necessary resources, such as call centers and trained staff, not to mention technology. "To make a patient-centric revenue cycle, you need to focus on the patient experience," says Jeff Noonan, senior director with Alvarez& Marsal's healthcare industry group. "Leverage the hospitality trends of other industries, such as hotels and airlines." Educated patients presented with all the tools necessary to meet their financial obligations are essential to a healthy revenue cycle in the current healthcare climate.
2. The business at its core: Software vs. people. Vendors will argue that revenue cycle management boils down to the tools, while providers will argue it comes down to who uses the tools. "I've seen organizations that have great operations and great culture utilizing ancient technology, but they make it work," says Mr. Noonan. "But, I have never seen bad operations make great technology work."
Undeniably, technology designed to drive each and every aspect of revenue cycle management toward perfection will continue to roll out, and on the other end people will be prepared to leverage that software. The ideal core of the business would be a symbiotic relationship between software and human resources: the right tools with the right people. But, of course ideals and reality rarely meet. Instead, focus on essential goal of any healthcare business. "Ultimately, the business is about serving people and their health," says Shiv Gopalkrishnan, vice president and general manager of Healthcare IT at GE Healthcare.
3. The demise of fee-for-service reimbursement. The Obama administration has put Medicare on the path to value-based payment models and many commercial payers are headed the same way. From accountable care organizations and population health to bundled payments and quality metrics, the payment equation in healthcare is never going to be quite the same. The strengthening marriage between value and compensation brings the clinical and business spheres of medicine into the same arena. Providers will not only need to continue providing quality care, but will also need the tools to demonstrate that quality. The penalties for not participating in quality initiatives, such as the Physician Quality Reporting System, are on the rise. Providers that do not embrace the value equation will find an increasing impact on cash flow and subsequent damage to their revenue cycle.
The value revolution in healthcare not only impacts how care is compensated, but how it is delivered. There is a push for integration and the creation of a continuum of care. Caring for individuals and on the population scale creates a complex problem to tackle. What providers will work together? How will they work together? What tools will they use? Will they be able to exchange data? "The tools are in the marketplace. The people who can stitch those together will emerge as leaders in value-based care," says Mr. Gopalkrishnan. "We just need a catalyst to create a fusion reaction." What healthcare revenue cycle management will look like once the value equation is finally deciphered remains to be seen.
4. The payer-provider meld. Historically, revenue cycle has been driven by the relationship between payers and providers, but now these two groups are no longer remaining distinct from one another. "The line between payers and providers is starting to blur," says Mr. Gopalkrishnan. "A lot of providers are launching their own health plan and on the flip side payers are investing in provider networks."
As these new entities form, the need for large-scale, integrated revenue cycle management tools will continue to rise. "The integration of health plan management and revenue cycle management will be vital," says Mr. Gopalkrishnan. "There will be a need for a revenue cycle management tool with a common backend from benefits management to billing."
5. Outsourcing. Outsourcing revenue cycle functions in healthcare is not an altogether new idea, but it is poised to occur on a much greater scale. "It is becoming cheaper to outsource and the talent pool has grown," says Mr. Orseno. As more regulations that affect revenue cycle management continue to roll out, such as the impending ICD-10 deadline, the pressure and cost of maintaining effective internal teams will rise.
While the way payment in healthcare is dramatically shifting, the basic revenue cycle elements will remain the same. "Ultimately, providers will still have to send bills and adjudicate claims," says Mr. Noonan. "But now, cost efficiency is becoming essential." Many providers will find outsourcing functions such as coding and billing to be an effective answer to collecting as many dollars as possible at the lowest cost.
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