There’s a serious problem in the healthcare industry. As hospitals, long-term care facilities and other providers rush to implement new technology, they are being hit with unexpected cash flow issues. A recent Becker’s article, Texas hospital encounters billing, cash flow issues after Cerner go-live, spotlights this problem.
Unfortunately this issue is playing out in facilities throughout the country. While it is not unusual to experience an initial loss during the first go-live month of a conversion, for many the financial bleeding continues much longer than it should. Fortunately, there are steps healthcare organizations can take to significantly minimize the financial impact that can occur when converting to new software.
Do Pre-Work
When looking to implement a new revenue cycle management (RCM) system, before preparing a request for proposal (RFP) or speaking with software vendors, pre-work must take place. Pre-work helps identify change drivers, and provides insight into your billing organizations including who you are, where you’ve been and where you want to go.
A pre-analysis of an organization’s business rules ensures billing is managed properly. A pre-analysis will also help identify strengths and weaknesses, and offer clarity to develop business goals. Despite the importance of this work, too often in the rush to implement something new, pre-work is overlooked. Failure to properly conduct pre-work causes a host of problems along the road to conversion.
While the technology itself may be a contributing factor to a financial loss, it is not uncommon for issues to occur well before the software conversion. Pre-analysis also helps you identify non-technology issues that are negatively impacting cash flow. A full audit/inventory of current billing processes including days in A/R, age trial balance, days outstanding, etc. should be conducted. If something is outstanding for 90 to 100 or more days, review those accounts before moving forward with the software conversion and determine a plan of action.
Run Systems Concurrently
No matter how good the project manager, no implementation will catch every single rule. Therefore the old and new systems should run concurrently for at least the first month.
For example, an RCM system can have hundreds if not thousands of scrub rules. If the new system catches 80 percent of the rules, 20 percent are missed. What if the 20 percent includes a $100,000 claim that didn’t go out to a payer? When running old and new systems concurrently it is easier to spot billing discrepancies.
Checks and balances work both ways. A discrepancy like the 80/20 example above can indicate an error in how something was previously done. By identifying the error it can be corrected so it doesn’t carry over to the new system.
Discrepancies can also be an indicator that something is not right with the new system. For example, if you have 300 accounts in bad debt, with a total adjustment value of 100,000; this should be the exact total in the new system. If you have an AR rule that moves all insurance type A accounts into an adjustment queue, and you have trended 45/week, but in the new system it drops or increases sharply outside of one standard deviation, this is an indicator of trouble.
Running audit reports in new and old systems allows you to identify system discrepancies and effect changes before the conversion is complete
Another example is a spike in A/R days. While a spike is to be expected during the first month of the go-live, it should resolve itself in the second month. If it doesn’t this is a red flag that needs to be addressed immediately to avoid ongoing losses. Shutting off the new system and reverting back to the old system will stop the bleeding while a root cause analysis is conducted. Once the source of the problem is identified the go-live date for the new system can be reset.
To ensure there is no miscommunication with the vendor on go-live expectations, it is important to set up a service level agreement (SLA). This agreement should include a plan to run old and new systems concurrently with the option to cut back to the old system according to terms outlined in the agreement.
Don’t Assume it is a System Issue
When moving from one RCM system to another expect additional write-offs that wouldn’t have otherwise been done. For example, during an audit it’s discovered that $10 million in A/R has been sitting on the books for a while. Now, during the conversion, is the time to write it off. Because a write-off will create an expense, it is important that these A/R transactions are segregated. Otherwise, it is too easy to roll these types of transactions into the “transition” project, when in reality it is not software specific.
It is also important to note that sometimes personnel negatively impact the conversion process. No matter how fancy the system, if personnel fail to commit to the new system it severely limits the accuracy and potential of the new system. To minimize personnel issues, it is important to identify internal champions within each department to drive change and champion consistency and accuracy. Training will also play a key role to ensure users are comfortable with the system.
Cut through the Hype
There is a misconception about technology that the more expensive it is, the better it must be. This is not always true. You shouldn’t have to pay $150 million for an EHR system for four hospitals. If you’ve done thorough pre-analysis and truly understand the business problem you are trying to solve, you can compare and contrast vendors in a more educated, informed manager. In doing so you might be surprised what you find.
There are a lot of small- to mid-size EHR and RCM vendors that are quickly becoming the disrupters in their respective spaces. These vendors offer more power, features and function over some of the larger legacy vendors, all at a smaller price tag. This is partially due to their size which provides a more streamlined product and process compared to larger vendors.
Today’s technology options are plenty. So before you select a vendor, conduct thorough research. Understand your current processes and system, and identify areas for improvement. Have questions ready for potential vendors, and be wary of vendors who simply want to install their technology rather than working with you to solve problems specific to your facility.
Implementing a new RCM system is a chance for a fresh start. With the right amount of pre-work and a technology partner that truly listens to your needs, billing and cash flow issues can be greatly minimized.
By Ken Miller, Revenue Cycle Management Expert at Cantata Health