Standardizing claims management systemwide: The Stanford Children's Health RCM improvement project

Health systems are complex organizations that challenge their leaders to find the path to standardized processes.

Revenue cycle management can be one of the most convoluted processes in healthcare. Claims flow from multiple sources across different IT systems. Andrew Ray, director of professional revenue cycle at Palo Alto, Calif.-based Stanford Children's Health, describes how his health system shifted the claims management process from an outsourced practice to an in-house, standardized operation within less than a year.

Q: What was Stanford Children's approach to claims management prior to deciding to standardize the process?

Andrew Ray: The process was previously outsourced, so when we decided to bring that component back in-house we were looking to automate the processes and technology. At this time we were also preparing for a change in our clearinghouse and an implementation of a new EMR and revenue management system.

We used that timing to completely rebuild the revenue cycle processes with a focus on automation and error identification/prevention prior to claim denial. Given the complexity of our care and the payer environment in Northern California, we knew we would not achieve standardization without first automating and utilizing technology more effectively. Our goal was to identify potential errors prior to occurring and engage trained staff to review and make adjustments as necessary. We utilize a very robust set of claim edits to achieve this; we are constantly adding and tweaking those to improve and respond to clinical and payer changes.

Q: What were the biggest challenges?

AR: The biggest challenge was the sheer amount and suddenness of change this brought to the organization and our staff. We replaced all of our technology and implemented completely new processes in a matter of eight months, a feat that may seem even crazier after the fact than it did during the process.

The planning and building took place for a few years prior to that, of course, but the actual changes came basically all at once. We had many areas for optimization and improvements after these changes were implemented and our entire organization responded with great energy and focus even on the heels of years of planning, building and a big-bang go-live. We could not be more proud of how enthusiastically the team responded and took ownership of the new systems and processes.

Q: How did Stanford Children's new approach impact its revenue cycle?

AR: There are several quantifiable improvements, as well as workflow and organizational improvements that are not easily quantified.

Even with changing all of our technology and processes, we immediately achieved slight improvements in all of our major revenue cycle key performance indicators and have achieved significant and sustained improvements as we continue to implement optimizations. Payment within 45 days of billing for professional billing, one of our main KPIs, improved from 70 percent to 90 percent over approximately 15 months.

Overall, cost to collect for professional billing was reduced by 50 percent (several million dollars annually), even though we grew our business by 40 percent. We are now able to take on the growth with minimal needs for increased staff due to improved automation and efficiency. We are also able to better focus employees on the more complex problems where we need their expertise, rather than on manual, repetitive tasks.

More generally, through these new technologies and improved, centralized reporting, the entire organization is much more engaged in revenue cycle performance and understands how their work impacts the financial health of the enterprise — a key improvement given the significant investment we are making in expanding our hospital in 2017.

Editor's note: Stanford Children's Health is in the midst of a $1 billion expansion that will add 521,000 square feet of space to the Lucile Packard Children's Hospital Stanford.

Q: What advice do you have for other health systems looking to standardize the claims management process?

AR: Focus efforts on automating processes through technology and don't underestimate the impact of minor improvements. For example, we partnered with our new clearinghouse vendor to setup electronic billing and payment processing with every payer possible, focusing on highest volume payers first. Given that we had this in place for about 75 percent of our transactions previously, we did not anticipate significant revenue performance improvements. We were primarily focused on efficiency and automation to help control costs. However, now about 95 percent of our transactions are electronic. That change resulted in a 7 percent improvement in our payments received within 45 days, nearly half of our total improvement in this key area.

Also, engage others across the organization as you make changes. We are lucky to have amazing IT partners, but we also got some of our best input (and ultimately results) by engaging staff and management at all levels in numerous departments, even when their daily input into the revenue cycle is minimal. This had the added benefit of enhancing staff buy-in during the roll-out of the wholesale process and technology changes we made.

More articles on revenue cycle management:
Don't be in denial: Your final denial rate is not the answer
RCM tip of the day: Monitor your contracts
RCM tip of the day: Breaking down silos

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