Best practices for consolidating RCM during hospital mergers

For hospitals eyeing mergers this year, executives may be surprised to hear that consolidating revenue cycle departments is likely the best place to start.

Mergers, acquisitions and other types of partnerships have become increasingly important as hospitals transition to value-based models and focus on providing coordinated, cost-effective care. Hospital M&A activity jumped 70 percent in the last five years, according to recent study by Kaufman, Hall & Associates, and is expected to continue playing a significant role in healthcare business practices.

In light of the increase in hospital M&A activity, Robert Parris, managing director of Huron Healthcare, spoke with Becker's Hospital Review about the strongest expedites and biggest inhibitors to successful revenue cycle consolidation.

Experts at the Chicago-based consulting company believe revenue cycle is a good place for merging hospitals to begin consolidation efforts because it is both people and process driven, says Mr. Parris.

The architecture of a revenue cycle oftentimes looks very similar between hospitals — beginning with patient access, closing with collections — thereby making RCM an appealing place to begin stabilization and standardization processes between entities.  

Moreover, revenue cycle functions can be completed across various locations between the merging hospitals without requiring a centralized office or entity level expertise. For instance, Mr. Parris explains, cash posting processes require individual personnel to have knowledge of specific payer-provider contracts, yet can be facilitated virtually at multiple sites. This makes implementing standardization strategies more straightforward.

Though RCM may be the best place to begin consolidation, it can present a unique set of challenges for hospital executives.

"Consolidating revenue cycle departments is both an art and a science," says Mr. Parris. 

"There is no formulaic, cookie cutter approach that can be applied between one merger transaction and the next." Taking time in the beginning to understand particular dynamics within RCM departments may open up issues and create opportunities hospitals otherwise wouldn't have seen.

Like in any office environment, individual revenue cycle arms operate under discrete and unique cultures. Mr. Parris emphasizes the importance of "peeling back the onion" to assess and understand each department before initiating changes that may alienate staff.

In his experience, Mr. Parris has seen some departments be particularly resistant to change when employees feel overlooked, or when there is not a service-level agreement in place to define quality and responsibility.

To mitigate feelings of disaffection among ground-level staff, hospital leaders should devise transparent, effective communication strategies at each level of service, as well as establish identifiable and inclusive bodies of governance that give departments an outlet in which to voice concerns as the merger takes effect.

Huron Healthcare's recent whitepaper, The Art of Putting it Together, which outlines best practices in stabilization and standardization during RCM consolidation, can be accessed here.

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