Why utilization management matters

At first glance, the healthcare landscape doesn’t seem bright for providers: overall costs are still rising, denials threaten revenue, and complexities of care complicate many of the best management efforts.

Yet there is positive momentum building against these trends as healthcare organizations look to reinvigorate many value-based care avenues like utilization management. Defined as the group of activities and processes focused on medical necessity and appropriate care, utilization management has proven invaluable in balancing providers’ compliance and revenue.

Over the past several years, I’ve seen a dramatic shift in the way hospitals and health systems approach the discipline. Once neglected, utilization management staff are now seen as a vital part of compliance and cost containment strategies. Healthcare leaders are positioning their utilization management teams and structures to deliver on two goals: responding and adapting to changing market forces and regulations, and transforming UM from simply an operational requirement to a strategic driver of compliance and revenue integrity.

These changes are just the beginning. New data-guided approaches like precision utilization management, move beyond the concept of ‘UM by exception’ to apply real-time data and insight selectively within the review process – making determinations that ensure the right patient status and disposition at the right time. And compared to the manual, laborious processes of decades past, these approaches will only increase in effectiveness as new technologies are adopted and integrated into the field. Even now, by strategically deploying people, processes, and technology, I’ve seen organizations drastically improve in key metrics: measurably decreasing length of stay, improving staff productivity, and halving their denials.

Hospitals spend millions of dollars each year ensuring they are paid accurately for services rendered. While denials may seem like an inevitable part of the revenue cycle, providers can drastically impact their upfront risk with a strong utilization management framework. The care and services provided to patients must occur while the patient is in the appropriate status to be billed in compliance with payer requirements, a key determination made by utilization management staff. Empowered utilization managers, effectively framed data, and a continuous process evaluation together form the first line of defense against revenue loss.

People are the greatest asset in the utilization management equation. Education is crucial for effective utilization management: keeping staff up to date on the latest regulations, trends, and best practices ensures they are well equipped to make the right utilization decisions. New technology promises to expand the impact and efficacy of utilization management experts, helping providers offer not only the highest quality of care and patient satisfaction, but maintain levels of compliance that exceed industry norms. Structure also plays a major role: many organizations are transitioning to centralized utilization management functions, in part to create consistency by standardizing processes. And utilization management teams are often relationship-builders within the organization: by aligning physicians, physician advisors, CDI specialists and care coordinators behind common objectives, utilization management teams set a precedent of unity across the care continuum.

For hospitals and health systems, managing care effectively and efficiently should be a leadership priority and a metric of organizational success. As the bridge aligning cost with value, utilization management matters now more than ever.

About Joan:

In 2013, amidst a healthcare industry characterized by huge revenue losses for hospitals nationwide due to unreimbursed or under-reimbursed services, XSOLIS began with the aim of providing a data-guided approach to addressing operational, compliance and regulatory issues. With more than twenty years of healthcare IT leadership experience across the Payer, Hospital, Physician, and Pharmacy verticals within healthcare, Joan Butters brings unique insight and expertise to her position as Chief Executive Officer and co-founder of XSOLIS, which now provides cognitive computing-driven technology solutions to hospitals across the nation.

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