5 Major Issues for Hospital Revenue Cycle Teams

For many hospital revenue cycle teams, no mantra resonates clearer than "adapt, or get left behind."

Hospitals are under much more pressure to collect various streams of revenue — due to lower Medicare, Medicaid and commercial payor reimbursements — in order to stay solvent, maintain a requisite cash flow and keep revenue figures stable. Credit rating agencies and a hospital's own internal financial management teams know that cash is king right now, and the revenue cycle teams have to overcome the contemporary obstacles to keep a steady cash and revenue flow.

Julie Corcoran, principal consultant at Hayes Management Consulting, breaks down five of the major issues hospital revenue cycle teams are facing today and how they became issues in the first place.

1. Competing high-priority projects. Hospital revenue cycle teams feel pressured to maximize collections primarily because they know changes are coming down the pike due to healthcare reform and major shifts in the market, which are causing the teams to juggle several major initiatives at once.

"Some of the major driving forces behind stress at the hospital C-suite level are that there are so many competing high-priority projects right now," Ms. Corcoran says. "They are focusing on ICD-10, meaningful use, clinical documentation education, reducing reimbursement, market changes — there's never been a greater time of transformation in healthcare. That, in and of itself, is a huge challenge."

2. Lack of skilled resources in several areas. Some hospitals have struggled to find the right personnel with critical and sufficient knowledge of project management, clinical documentation improvement, coding development and other revenue cycle functions. Ms. Corcoran says this lack of the right people to fill vital roles could hamper day-to-day operations, and it could ultimately affect the hospital's performance, especially if the revenue cycle teams are fragmented.

"Integrated and smaller systems have a huge lack of people resources," Ms. Corcoran says. "Some leadership and management modules are actually becoming more siloed than collaborative, and that combination of working in silos with huge, competing agendas is creating a lack of communication and inefficient operations."

3. Narrowing margins and escalating costs. As mentioned earlier, drops in Medicare, Medicaid and commercial reimbursements are forcing hospital executives to look at their organizations and see where they can increase efficiencies and automation to save money. The revenue cycle is normally one of the first areas hospitals look to change during these types of situations.

"The drive to purchase, implement, upgrade and adapt clinical software and integrated systems is powerful, and it's driving an increase in hospital budgets already struggling with decreased reimbursement," Ms. Corcoran says.

4. Significant market changes. Regardless of what happens with the Patient Protection and Affordable Care Act, hospitals will have to deal with fluctuating amounts of insured and uninsured patients. One trend is pervasive, though: Employers are pushing more costs onto employees causing some to drop health coverage, and the economy is still stagnating to the point where millions simply do not have health insurance due to a lack of jobs.  

Hospitals will always have to provide care for the uninsured, but revenue cycle teams have to make sure their commercial payor contracts are as robust as possible to balance the large influx of the uninsured population. "As the market changes and people are shifting into different insurance models, hospitals are going to have to be in a better position to negotiate better contracts," Ms. Corcoran says.

5. A need to examine and optimize revenue cycle processes. It's challenging enough that hospital revenue cycle teams have to juggle multiple high-priority projects at once. It's a completely separate, and perhaps even tougher, assignment to separate the projects and nail down how to make them as seamless as possible.

"We are definitely beginning to see the need for hospitals to intensely examine their entire revenue cycle operation," Ms. Corcoran says. "It's been pretty much status quo, and hospitals have been running on autopilot for some time. If that's the case in any larger integrated health delivery system, they're definitely leaving revenue on the table."

There are five core areas hospitals have to examine carefully and individually: ICD-10, system integration, clinical documentation demands, billing and claims management, and contract analysis.

•    ICD-10. Hospital CFOs and other financial management teams have heard this drumbeat for a while now: ICD-10 is not only a coding/health information technology issue; it's a revenue issue, too. An extra year for compliance — to Oct. 1, 2014 — should not give anyone involved with the revenue cycle a false sense of security. Physicians need documentation updates and coders need sufficient training, which is not something that can be completed in a couple of meetings.

•    System integration. Revenue cycle systems, as Ms. Corcoran says, are very siloed, which could lead to lost revenue opportunities. Hospitals need to start looking at integrated software and hardware systems, assuming capital is set aside for a project of this magnitude, that can combine patient accounting, billing, collections and electronic health records.

•    Clinical documentation demands. Similar to ICD-10, meaningful use and other electronic clinical documentation requirements are not just health IT issues; they are revenue issues. An improved EHR will improve the entire revenue cycle process, Ms. Corcoran says.

•    Billing and claims management. Reducing denials and rejected claims, training staff on denial management processes, improving point-of-service collections and decreasing delays in patient billing can all improve revenue cycle productivity.

•    Contract analysis. Having robust data and a strong strategy can give hospitals and other providers more leverage in negotiation sessions, and the revenue cycle has to have the confidence to both effectively negotiate rates and adjust the contracting process as needed to boost revenue opportunities with payors.

"[Health systems] really need to put together a work plan that is going to start a deep dive in the revenue cycle process, from the front end to billing and claims management to dashboard reporting," Ms. Corcoran says.

More Articles on Hospital Revenue Cycle:

Aligning Case Management Processes With the Revenue Cycle

5 Benefits of Improving Patient Charge Estimates

How Clinical Documentation Improvement Could Improve the Revenue Cycle

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