Preparing for a conversion of any kind is no small task. But coordinating a conversion that involves transitioning patient accounting systems must include specific fiscal, cultural and operational considerations. When these aren't accounted for early in the preparation process, organizations can run into cash flow problems later that set collection rates back by several months.
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However, with the proper fiscal planning, staff engagement and executive support, healthcare organizations can minimize their financial risk and more quickly return to, or exceed, baseline performance.
Few know this better than conversion-veteran Joe Koons, managing director of revenue cycle for Centra Health, a regional nonprofit system in Lynchburg, Va. Since August, Mr. Koons has led efforts to prepare Centra's revenue cycle departments for conversion to Cerner's patient accounting system, slated to go-live March 2018.
Centra's size has made planning a conversion particularly complex. Centra provides medical services to patients across a geographic area roughly the size of New Jersey. Its diverse portfolio spans the full continuum of care, including four acute care hospitals, more than 50 ambulatory and long-term facilities, a freestanding ER and a 300-physician medical group. The health system recorded $1.1 billion in net revenue in 2016. Centra also oversees a burgeoning health plan covering more than 45,000 residents in south-central Virginia.
"The amount of resources behind a conversion of that size is daunting," Mr. Koons said. "The complexity of the system is at the degree where there are lots of different bill formats and unique requirements that have to be considered ... and coordinated with the different clinical workflows."
Many hospitals pursue IT conversions to enhance system interoperability, improve workflow efficiencies and gain tools to manage a more complex care environment. Although C-suite leaders generally agree the long-term benefits of conversion outweigh the short-term challenges of implementation, a mismanaged conversion can have severe financial consequences that limit an organization's capacity to function, and may even affect patient care.
Having realistic expectations of how a conversion will affect day-to-day processes can help revenue cycle leaders take initiative to mitigate financial risk, Mr. Koons said. This article examines the potential financial effects of a conversion, as well as four key steps Centra Health took to address and minimize financial disruption.
Tactics to mitigate financial disruption during conversions
A patient accounting system (PAS) conversion involves the gradual transitioning of workflows from a legacy system to the current system while maintaining day-to-day operations.
"The internal operation has to continue to move forward [during conversion], so it's a juggling act between maintaining current operating performance and standing up this new system that's going to replace all the current workflow," Mr. Koons said.
This juggling act between systems can reduce productivity and introduce opportunities for financial information to slip through the cracks. Missing claims, missed revenue capture and late patient billing can result in fewer collections and slower collection rates. Hospitals with particularly bumpy conversions can see baseline collections fall 195 percent below baseline performance — equivalent to two months' worth of collections — within nine months of implementation, according to a 2016 Crowe Horwath study.
Even hospitals with middle-of-the-road conversions have seen noteworthy disruption to revenue cycle operations, according to the Crowe Horwath study. Hospitals' average benchmarks for key performance metrics within one month of implementation included: a 10 day increase in days in accounts receivable, from 52 days to more than 62; an 86 percent increase in days-not-final-billed; and a 21 percent decline in collection rates.
Although these metrics may appear discouraging, there are four key actions hospitals can take to mitigate — and possibly eliminate — the negative financial consequences of conversion, Mr. Koons said.
1. Create a revenue cycle governance structure.
To minimize disruption, Mr. Koons recommended organizations establish a governance framework to ensure revenue cycle KPIs continue to meet pre-conversion benchmarks.
For example, Centra established a reporting structure consisting of three management tiers to monitor day-to-day operations as well as high-level strategic progress.
Centra's first process management tier — the revenue cycle action team — consists of directors from revenue cycle departments as well as project leaders from Cerner. The action team is responsible for monitoring a laundry list of performance metrics at a granular level, such as gross and net days in A/R, cash as a percent of net revenue, DNFBs, denials, partial denials and A/R aging by 90 days by payer, among others. If KPIs deviate from the expected rates, the action team notifies second tier management and executes corrective measures to get the department back on track.
The second and third tiers — the revenue cycle finance steering committee and revenue cycle advisory committee, respectively — examine and discuss high-level implementation strategies and initiatives to ensure a smooth transition. For instance, the advisory committee considers and monitors costs associated with conversion scope, ensuring the project doesn't overrun its budget.
"The framework is in place to ensure the scope of the conversion doesn't balloon to the point where it jeopardizes or puts the project, or the organization, at risk," Mr. Koons said.
2. Increase cash on hand.
Another way organizations can minimize financial disruption is to augment cash reserves and enhance revenue cycle performance prior to conversion.
Initially, some organizations may struggle with cash collections after transitioning between patient accounting systems, per Julie Kay, vice president of revenue cycle services at Cerner. This can happen when an organization begins to focus on completing work in the new system and inadvertently lets legacy A/R work slide, which can lead organizations to suffer a cash crunch or issue with their reserves.
"You have to set the expectation that there is going to be a short-term decline in cash unless certain steps are taken to protect cash flow and prevent billing delays," Ms. Kay said. To mitigate financial risk during conversion, Ms. Kay recommended organizations optimize revenue cycle processes and take steps to increase cash on hand. Working down days in A/R, reducing DNFB to around four days and enhancing charge capture processes are effective ways organizations can create a financial cushion to mitigate any dip during the conversion.
"Having a very rigorous project plan in place is important, not just for converting, but also for managing and maintaining accounts receivable and knowing how many days of cash on hand you need should something happen during implementation," Ms. Kay said.
3. Counter productivity issues by adding support staff.
Enlisting the support of a third-party to augment revenue cycle staff can be invaluable during a conversion, when hospital resources are stretched thin, Mr. Koons said.
Some organizations choose to outsource all legacy A/R work during a conversion so internal staff can focus entirely on standing up the new system. This abrupt transition, although intended to help staff learn the new system more quickly, can end up overwhelming employees and harming office morale.
Gradually introducing staff to new workflows while they wind-down legacy A/R can help employees feel more comfortable and confident with change. "Internal staff's expertise is in the legacy system," Ms. Kay said, meaning internal employees are often the most productive and efficient at working the legacy system. As a result, organizations that gradually shift workflows may see a less marked impact on productivity levels as employees gain competence in the new system.
To further ensure productivity remains consistent during conversion, health systems should enlist supplemental office support. "We've partnered with Cerner's RevWorks for supplemental staffing, known as transition services, to bridge our productivity gap during conversion and ensure performance remains consistent while our internal staff gain efficiency on the Cerner system," Mr. Koons said.
Specifically, RevWorks' team of experts focuses on refining work processes in the Cerner system as employees work down legacy accounts. By setting up and smoothing out processes in the platform before the office fully converts, RevWorks ensures the transition is as seamless as possible.
Cerner's team also plays an important role in helping staff learn best practices in the new system. "RevWorks teams work side-by-side with [hospital] staff to help them both understand new workflows and learn how to use the system at its full capacity," Ms. Kay said. For instance, as hospitals undergo a software conversion, hospital IT and revenue cycle staff may have a general idea of how to use the new system to complete a particular task, but they may not know system best practices. Cerner experts can recommend alternative workflows that take full advantage of the IT system's efficiencies.
Although an IT vendor is likely to have unmatched knowledge of its product, value-added resellers, consultants and other business education and training companies are also worth considering for employee training and support services, according to Mr. Koons.
"[Centra] also partnered with a company to build the training content and curriculum for staff system conversion," he said.
4. Engage staff in the conversion process.
System conversions present as many cultural challenges as they do technical difficulties. People are creatures of habit, which can lead to resistance to change among employees. It is no different in a field as disciplined and regimented as medicine, where healthcare professionals are often uncomfortable with abandoning ingrained practices in favor of new, unfamiliar ones.
The importance of anticipating and addressing cultural challenges during a PAS implementation cannot be understated. "Change is very uncomfortable and awkward for staff," Mr. Koons said. "We want frequent communication to the organization and inclusion as much as we can from a high level down to alleviate any fears that the change will be overwhelming."
Knowing that a patient accounting system implementation will cause complications for staff, an organization's implementation teams must find ways to boost morale. To foster a culture of change among revenue cycle employees, Centra presented the conversion as an enterprisewide movement for improved connection and unity.
"We called Cerner 'Unison,' or the 'Unison Project' to generate excitement among staff," Mr. Koons said. "We've held a number of events to kickoff the 'Unison Project' and scheduled town halls where we've demonstrated the system to employees in advance."
Conclusion
The fact that change has become a near constant in healthcare does not make navigating transformation any easier for employees or administrators. Engaged and effective leadership and a well-established implementation management team are key to leading an organization through times of instability.
"Hospital leaders tend to become fixated on the technical conversion," Ms. Kay said. "But Centra is doing a fantastic job of preparing their organization for change on all fronts, from employee engagement to executive leadership. They understand the culture of their staff, their physicians, their community — and that's what makes a difference."