Revenue cycle innovation: 4 takeaways from the CommonSpirit Health

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As health systems nationwide respond to increased consumerism, as well as calls for greater health equity and cost reduction, many are attempting to optimize their financial performance to help meet these challenges.

During a June webinar hosted by Becker's Hospital Review and sponsored by Optum, two healthcare leaders discussed strategies to reinvent revenue cycle operations and how strategic partnerships can help achieve this goal:

  • Steve Scharmann, system vice president revenue cycle, DignityHealth, now a part of Chicago-based CommonSpirit Health
  • Doug Hires, COO, provider solutions, Optum

Four key takeaways were:

  • CommonSpirit Health's partnership with Optum delivers greater investment in revenue cycle innovations. In February 2019, DignityHealth merged with Catholic Health Initiatives to form CommonSpirit Health. In 2013, DignityHealth formed a partnership with Optum to develop cost-effective, state-of-the art revenue cycle processes that united Optum's technology with DignityHealth's revenue cycle subject matter experts. "We have to fight for capital dollars, since most of that investment goes to our clinical areas," Mr. Scharmann said. "Thanks to Optum 's focus on revenue cycle technology and best practices, we now enjoy processes that we wouldn't have otherwise been able to afford." The results have been positive. In 2020, CommonSpirit Health's total fiscal year cash collections were 100.5 percent of net revenue, with a $49 million favorable variance to total. In addition, accounts receivable aged greater than 90 days decreased by $224 million compared to the pre-COVID-19 baseline. This was driven primarily by cash collections.
  • Revenue cycle innovation challenges the status quo, but organizations still need guardrails to guide their work. Revenue cycle is complex. Many manual interventions are needed to resolve problems. A lack of standardized processes can quickly become a significant problem. The baseline for innovation is "systemness" — that is, an approach to decision-making centered on value to the whole organization. Additionally, organizations must use parameters to prioritize their innovation work. All innovation projects must be aligned with the organization's goals. They also need to be patient friendly and achievable, and deliver a return on investment. Ask yourself what the organization will get from this work," Mr. Scharmann said. "It might be greater efficiency, improved patient or provider satisfaction or reduced costs."
  • To reinvent the revenue cycle, health systems need a culture of innovation. Organizational leaders must be open to new ideas. Revenue cycle teams need to pay attention to end user feedback from both patients and clinical staff. Teams must be willing to accept constructive criticism and compare themselves to their peers.
  • Technology alone will not deliver innovation — people and processes also play a central role. Many revenue cycle teams fall into the "technology mind trap," which is believing innovation is synonymous with the introduction of technology and automation. Technology is an enabler, but people and processes are required for successful innovation. Optum uses a highly structured, Lean-based innovation process to drive innovation at partner organizations. "We focus on understanding the problem by performing root cause analysis and generating analytics," Mr. Hires said. "We benchmark performance and prioritize improvements that will deliver the highest impact. Teams need to be very specific about how you will track and report performance to ensure that you see the expected ROI."

To view the webinar recording, click here

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