How to navigate growing RCM challenges in healthcare

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Hospitals and health systems across the country are faced with many revenue cycle management challenges, some of which are caused by the industry transitioning to value-based payment models and the increasing popularity of high-deductible health plans. 

During a Navigant roundtable discussion moderated by Molly Gamble, editor-in-chief of Becker's Hospital Review, at the Becker's 5th Annual CEO + CFO Roundtable in Chicago, two health system executives and a healthcare futurist discussed a few RCM challenges and how they are addressing those issues. 

The participants began the discussion by tackling the topic of financial risk. As the industry shifts to value-based care models, there isn't a one-size-fits-all approach for health systems taking on risk. To succeed in a pay-for-performance environment, many provider organizations are entering into alternative payment arrangements such as ACOs. Northwestern Medicine in Chicago is one system that is using this strategy.

With a focus on efficiently providing high-quality care, Northwestern formed Northwestern Medicine Physician Partners ACO, according to panelist John Orsini, senior vice president and CFO of Northwestern Memorial HealthCare. The organization is part of the Medicare Shared Savings Program, which has no downside risk. Northwestern is now exploring additional accountable care agreements.

Northwestern is taking an evolutionary approach to value-based payment models by starting with an agreement that carries no downside risk and then deciding whether to take on more exposure. Other health systems have chosen a different approach and are already taking on a significant amount of risk.

To achieve cost savings in the transition from fee-for-service, many health systems are exploring the benefits of vertical integration, and an increasing number of systems are choosing to offer their own health plans. A veteran in this area, Toledo, Ohio-based ProMedica has had its own health plan for 20 years. Unlike many other systems that have launched health plans, ProMedica's plan is profitable, which has captured the attention of commercial payers. "Commercial insurers in the market see us as a competitor, and some want to buy us," said ProMedica CFO Michael Browning during the roundtable discussion.   

Although some systems are voluntarily taking on risk, the government is forcing provider organizations to bear more risk through initiatives such as the Comprehensive Care for Joint Replacement model. The CJR program is CMS' first mandatory bundled payment model, but healthcare futurist Jeff Goldsmith, PhD, who serves as a national advisor for Navigant, expects more of these types of arrangements in the future. "I don't think it's disputable that we're going to be asked to assume more risk," he said. He thinks the industry is going to see a modest expansion in the amount of risk providers take on, but he doesn't see the industry moving to a full capitation model. 

The roundtable participants also discussed another major trend in the healthcare industry: the increasing popularity of high-deductible health plans.

This trend has caused a huge shift in financial responsibility and presents major challenges for hospitals and health systems. "A lot of people who have high-deductible health plans don't have the money to pay their deductibles," said Mr. Goldsmith.

Although some patients with these plans can't afford to pay, others make a choice not to. "Sometimes high-deductible health plan members don't want to pay their bill," said Mr. Orsini. Many patients put their medical bills at the bottom of the pile, and prioritize their mortgage and car payment instead, he added.

The roundtable discussion participants outlined a few ways hospitals and health systems can increase the likelihood that patients with high-deductible plans will pay their bill. One key step is having open communication with the patient before they receive care. This involves providing the patient with a cost estimate up front, said Mr. Orsini.

However, providing a cost estimate is only one part of the equation. Hospitals and health systems also have to make the billing process simpler, according to Mr. Browning. This includes creating an easy-to-understand billing statement and providing patients multiple ways and times to pay.

More articles on healthcare finance:

Texas hospital abruptly closes after failing to make payroll
CHI records $483M operating loss as labor costs grow, patient volume declines
Oklahoma hospital explores bankruptcy

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