Academic Medical Centers account for 5 percent of America’s hospitals.
But they play an outsized role in the U.S. healthcare system. Along with top-tier education and research, such AMCs are integral to advancing technology for the industry.
That’s why when AMCs have trouble making ends meet, it represents peril for the U.S. healthcare system as a whole. But AMCs can minimize one of their most vexing issues-- revenue leakage --with effective use of data.
Through the use of big data, hospitals and other healthcare facilities have cut costs by more than 10 percent. They have also grown revenue by 30 percent.
The perniciousness of revenue leakage
Hospitals and AMCs in particular are so mired in complexity these days that it’s easy to see why some revenue slips through the cracks. The Affordable Care Act and Washington’s attempts at repeal, and tax reform make long-term planning difficult. They also make compliance a moving target. But there are other challenges which include changing demographics, technology and industry consolidation that threaten profitability.
Such concerns distract AMCs. As a result, they are less able to track and prevent the effects of uncompensated care. Despite Medicaid expansion, in 2016 uncompensated care increased by $2.6 billion (7 percent) to $38.3 billion. That was the first annual increase in uncompensated care since 2013.
A recent McKinsey & Company study noted that 15 cents of every healthcare revenue dollar is lost due to leakage. Such leakage stems from claims processing, payments, billing, bad debt and other inefficiencies.
How data can help recover revenue
There are many factors that contribute to revenue leakage at AMCs. Those include the inability to capture insurance information at registration, missing and incorrect policy numbers and insurers, timing issues in payer eligibility databases and claims denials, to name a few.
Some 30 percent of the average healthcare bill currently comes from the patient’s pocket. Patient self-pay will grow at a compound annual growth rate (CAGR) of 10 percent—from $47 billion in 2015 to $68 billion by 2019, according to estimates.
According to a recent TransUnion Healthcare study approximately 68 percent of patients failed to pay medical bill balances in 2016. That's up from 53 percent in 2015, and 49 percent in 2014. It is estimated that this number will climb to 95 percent by 2020.
This latest development offers a particular challenge to AMCs. America’s teaching hospitals care for vulnerable patients who may not have the ability to pay for care. But such AMCs will have to absorb the resulting uncompensated care costs. That threatens their ability to support and advance their research and education missions.
For AMCs, leveraging their own existing data feeds, in combination with the right analytics can cut the risk of revenue leakage.
Discovery tools use analytics to review all patient accounts — both paid and unpaid — deliver information that is actionable. These systems can identify the correct insurer for a specific service or beneficiary. They can also help with the often-challenging billing requirements.
Analytics-based technology can also identify Medicare account underpayments and billing system breakdowns. Both can in unreceived, unaccepted, returned or denied claims. Such systems let strained AMCs shift employee attention to other value-added activities. They can also automate very time-consuming and manual processes to improve billing.
Other ways that data can help AMCs plug revenue leakage include:
• Identifying hard-to-find insurance coverage and correct policy numbers
• Managing timing delays and changes in payer eligibility databases
• Identifying the correct payer information for a specific service
• Addressing unique Medicare billing challenges
• Analyzing accounts with no “meaningful” activity to look for information gaps
• Reexamining atypical billing requirements
• Revisiting zero balance accounts classified as “paid” or written off as charity allowances
• Looking at bad debt accounts for deductibles and copays to see if there’s a secondary payer
• Determining the correct primary payer where multiple coverage exists
• Uncovering billing system and process issues resulting in incorrect or unbilled claims
From afterthought to top of mind
Recoverable receivables is an afterthought with most providers, but it has become top of mind as providers are seeking innovative ways to remain viable.
By leveraging big data and predictive analytics, providers can move the needle—both for patient care and revenues.
Todd Langer, VP of TransUnion Healthcare Ops, has a B.S. in accounting from Brooklyn College and a J.D. from Brooklyn Law School. He is certified by HFMA in patient accounts and managed care and has more than 40 years of experience in Healthcare billing, finance and administration. To learn more please visit www.transunionhealthcare.com