Responding to RCM challenges and weighing decisions about whether to partner: Thoughts and observations from hospital leaders

In mid-September, more than a dozen executives, vice presidents and executive and senior directors of revenue cycle gathered in Chicago to discuss the evolving nature of the hospital and health system revenue cycle and how they are responding to its challenges, disruptions and priorities.

The conversation, part of Becker's Hospital Review 4th Annual Health IT + Revenue Cycle Conference, was made possible by Allscripts, a leader in healthcare information technology solutions that advance clinical, financial and operational results.

Ajit Sett, vice president of Sunrise Solutions Management with Allscripts, and Lyman Sornberger, chief strategy office with patient financial wellness company Capio Partners, led the hour-long roundtable discussion, which was equipped with polling technology through which roundtable participants selected responses and answered several questions via open field. During the discussion, Mr. Sett and Mr. Sornberger analyzed the poll results in real time.

What follows is a condensed summary of the discussion and polling that took place.

The top RCM challenges, disruptions and priorities facing healthcare executives

The majority of respondents (64 percent) said healthcare consumerism has been the most significant disruptor in the industry. The second largest pool of respondents (18 percent) selected value-based care and new payment models. Collectively, 20 percent of respondents either selected the rise of retail clinics, pharmacies and urgent care (5 percent); telehealth (5 percent); government-mandated quality reporting (5 percent); or M&A transactions in the revenue cycle segment of the industry (5 percent) as the most significant disruptor.

Consumerism is casting a broad shadow across revenue cycle leaders' strategy, as it emerged in responses several times throughout the live poll. For instance, 79 percent of respondents identified the increased adoption of high deductible health plans — a major tenet of consumerism as patients are responsible for a greater portion of payment — as the most concerning change in patient coverage as the ACA is pared down. Speaking of governmental regulations, most revenue cycle leaders (67 percent) said consumerism is what worries them most about the new governmental requirement to publish chargemasters. That is nearly three times as many people who cited operations (21 percent) as the largest concern related to chargemasters.

Specific to the revenue cycle, 74 percent of respondents said growth in clinical denials and patient receivables has been the most significant disruptor to their organizations' revenue cycle operations. And when it comes to the most important revenue cycle function, 67 percent of respondents recognized collecting revenue as the No. 1 function in their organizations; 25 percent of respondents chose capturing revenue and 8 percent chose generating revenue as their top priority.

Where outsourcing lies within hospitals' RCM strategy

Despite the considerable amount of precedence health systems are placing on revenue collection, participants displayed caution in regards to outsourcing RCM functions. Ninety-three percent of respondents said they outsource 0 to 25 percent of their revenue cycle; zero participants outsource 51 percent or more. What's more: 42 percent of respondents said they are not interested in outsourcing any one part of the revenue cycle to a partner.

Revenue cycle leaders are likely to look away from outsourcing when they feel their organization is able to manage the revenue cycle from end to end autonomously. "If you've got health systems with infrastructure in place and tools to do it, why would you outsource?" asked the senior director of patient financial services with a nonprofit integrated health system in the Midwest. "I think that's a reason a lot of organizations need to outsource — because they don't have those capabilities."

If they had to consider outsourcing, more than half (56 percent) of respondents said they were least likely to move patient access to an outside party. Interesting enough, this is the same function the majority of respondents (72 percent) ranked as their most urgent concern. In short: The function revenue cycle leaders are most anxious about is the same function they are least likely to consider outsourcing.

Some participants said they're insourcing some functions while outsourcing others. "We are insourcing a lot of our stuff because vendors are more expensive than hiring staff," said the executive director of revenue cycle for an academic health system on the West Coast. At the same time, the system is outsourcing its coding.

Aside from the 42 percent of respondents who said they are not interested in outsourcing any part of the revenue cycle, the next largest portion of participants (32 percent) ranked coding as the most attractive function to allocate to a quality partner. Coders represent a core area of staffing for hospitals; a shortage or low supply of coding talent hurts business operations and efficiency. Participants' comments revealed the difficulty organizations face when building competitive coding teams — a determining factor in why this function is attractive for an outside partner.

The director of patient financial services for an academic medical center in the Northeast said the competitive nature of recruiting coders drives a lot of organizations to outsource. Outsourcing may be especially enticing for healthcare organizations operating in more remote geographic locations where recruiting top coders can be especially challenging.

Worth noting, given its relevance to staffing and labor, is that 36 percent of revenue cycle leaders said the most significant benefit of artificial intelligence's automation capabilities is the reduction of staffing and administrative costs. Twenty-three percent pointed to work queues with prompts to help staff prioritize work as the biggest benefit to gain. 

Specialists or Jack of All Trades: Choosing the right partners

As critical as coding may be, health systems today increasingly face queries from vendors or partners who claim expertise in not one function of the revenue cycle, but the entire operation. When participants were asked how they assess such organizations' claims, respondents submitted concise reactions through the polling technology:

  • "If you outsource, you have to be a watchdog. You cannot assume the company is doing what they say they are."
  • "It's a lot of sales talk that they cannot deliver. [I am] concerned about any company that can do everything. Quality and efficiency are key."
  • "I have not evaluated any companies like this. However, my primary concern would be the quality of the work product. Seldom would you find a company that is excellent at all of the various segments of the revenue cycle."

When discussing these companies in conversation at large, respondents shared firsthand experiences with end-to-end revenue cycle companies. One executive had troubling experiences both outsourcing and insourcing her organizations' revenue cycle.

"We had one situation where we couldn't hire people locally, so we did outsource," said the vice president of patient financial services with one of the leading hospital operators in the U.S., with more than 100 sites of care. "We were successful for the first few years, but they start pushing profitability because they want more profit. So, they start stretching resources, and all of a sudden your whole environment has collapsed. I think it is a cost issue. [Vendors] are for-profit and trying to drive value, and it ends up being at the cost of your revenue cycle."

The same executive at the multistate hospital operator said she also experienced a hospital bringing an outsourced function back in house. She was immediately struck by how much control the partner had held over data that was distributed to the board. "When we brought it in house, we saw how they were making the numbers look good for their advantage," she said. "They made self-pay look like the regularly insured, for instance. They were also outsourcing a lot of things we didn't know about, so all of sudden we were under contract with all of these third-party vendors they held contracts with. It made the transition back not as costly as having it outsourced, but it did cause a lot of challenges for us."

Mr. Sett said contracts held between vendors and third-party companies are not only a cost problem, but a liability since they allow variation into RCM processes. "If I'm a coder and I'm doing it day in and day out for you, and then you open it up and 10 different people are doing that ... All of a sudden there are 10 different ways we are doing the same thing," he said. "It's not just the cost aspect of it, but the integrity of the process."

M&A activity among RCM companies: Does it present more value or risk to hospitals? 

The topic of process came up again regarding the rate of merger and acquisition activity — perhaps the ultimate process — rippling through the healthcare industry in provider and vendor spaces. When organizations look to join forces, they innately reexamine their cost structures and seek ways to eliminate duplication and lower expenses, possibly redesigning the way business is conducted as a result.

When asked how they assess the potential value and/or risk of M&A in the revenue cycle space at their organizations, roundtable participants submitted concise reactions through the polling technology:

  • Moderate. The challenge is ensuring that expected business results don't erode as a vendor goes through a transformation. We are also concerned that our leverage with vendors is being reduced as the industry consolidates.
  • What is their stated vision, and are they keeping the key leadership roles in the middle that can continue to run as-is while [the merger] is simultaneously leveraged?
  • Sometimes the mergers create silos instead of synergies depending on which piece of the new organization you are dealing with. It does take time to work.

When discussing M&A between revenue cycle companies in conversation at large, respondents voiced concerns as to how these transactions affect customer service, pricing and alternatives.

"We are in the process of transformation, so we are looking at all of our vendors," said the vice president of patient financial services with a U.S. hospital operator. "What it means to my organization is reducing the number of people with whom we have to negotiate from the vendor perspective. We were in negotiations with several [companies] that are now merging, so we are in the process of trying to solidify some prices before things happen. With larger mergers, it is harder to integrate. If they are distracted by product integration and the merger of leadership, that poses a problem to our customer service."

Conclusion

While difficult to draw sweeping conclusions from the hourlong discussion between the revenue cycle leaders, a few findings and links are certainly worth noting. First is the level of concern consumerism is raising for this group of professionals: RCM leaders cited consumerism as the largest disruption in the industry.

Second, it is worth noting the functions that RCM leaders find most and least compelling to outsource. The majority of leaders cited patient access as their most urgent concern in the revenue cycle today, yet respondents flagged patient access as the function they are least likely to consider allocating to a quality partner. On the other hand, respondents were most open minded about outsourcing coding if they had to move any one function out of the organization and to a partner. This finding is somewhat hand and glove to the fact that respondents see lower labor costs and workflow prioritization as the greatest benefits to gain from artificial intelligence an automation.

Finally, this pool of respondents demonstrated a considerable amount of hesitation about outsourcing period, but expressed particular reluctance to outsourcing to (a) RCM companies that claim to do it all, and (b) RCM companies that are in the process of merging. Several responses touched on the idea that health systems may be best suited to execute the revenue cycle from end to end, either because of quality control concerns, customer service concerns or the idea that they would need to closely monitor a vendor anyway, which is seen as redundant.

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