The recipe for better RCM: a holistic view, actionable data and a trusted partner

When the COVID-19 pandemic hit in 2020, elective procedures and other noncritical patient visits decreased to almost zero. This gave administrative teams at hospitals and health systems an opportunity to take a long, hard look at how they were handling the revenue cycle. Today, elective procedures and routine visits have resumed but healthcare organizations continue to experience intense financial stress and many wonder whether operations will soon become unsustainable.

As such, healthcare leaders are seeking better ways to handle the revenue cycle. The key to more effective revenue cycle management is getting back to basics with people, processes and technology. Becker’s Healthcare recently spoke with two healthcare experts from NTT DATA Services — Dr. Navesh Kandiyil, Healthcare Industry Consulting Director, and Rathish Moorthy, Healthcare Industry Managing Director — to learn more about how to overcome obstacles in these areas

It’s time to look at the revenue cycle holistically

Silos are an unfortunate reality when it comes to RCM. Every segment of the revenue cycle tends to be examined individually. Instead, healthcare organizations must take a holistic view — this is the only way to see the big picture, connect the dots, eliminate redundancy and maximize value.

“The revenue cycle ties to other aspects of the enterprise,” Mr. Moorthy said. “You have to look at the broader financial department, along with clinical operations, managed care and even supply chain. You need to have those deep dialogues to get a complete view.”

Dr. Kandiyil agreed, noting how looking at the revenue cycle holistically allows for cross-departmental alignment. “Two teams might inadvertently be doing the exact same thing because they aren’t talking to each other,” he said

Automation is one way to improve the employee experience

Every element of the healthcare workforce is being taxed in brand new ways. Administrative employees are overburdened — not only due to the volume of work they face on a daily basis, but also due to the nature and complexity of their tasks.

“When you look at burnout, a lot of it comes from the work that is on people’s plates today,” Dr. Kandiyil said. “The other element is employees realizing that they can get a job at a local store with a similar salary and half the headaches and stress.” He emphasized that turnover in the front-end revenue cycle workforce is very high, largely due to the burden of tedious tasks like scheduling, registration, eligibility, enrollment and checking for benefits.

One potential solution is to automate portions of the revenue cycle, such as scheduling, insurance verification, claims processing and denials management. To identify opportunity areas, teams must compare their ideal state to the current state. The goal is to enhance the revenue cycle and also to improve the employee experience. “Automation can improve work-life balance for teams and reduce employee fatigue,” Dr. Kandiyil said. “You want to leverage technology in ways that make people feel that their work is meaningful.”

When evaluating the role that people play in the revenue cycle, however, organizations must use caution. Dr. Kandiyil advised not to present opportunities for change in ways that could be perceived as criticisms of how employees are doing their jobs. “The goal isn’t to point fingers,” he said. “It’s a ‘how do we all get better together’ journey. If you don’t lead from the front with these expectations, you will put pressure on frontline workers and leaders.”

Process enhancement maximize revenue and team performance

Revenue leakage is a significant source of risk for hospitals and health systems. To address this problem, organizations need full visibility into their revenue cycle processes. “You’re employing staff to do a job, but you may not be getting an ROI because they’re set up to fail before they’ve even started,” Dr. Kandiyil said.

A good first step is to analyze whether all stages of the revenue cycle are communicating with one another. Dr. Kandiyil highlighted an example: How the bulk of denials come from the front end — where organizations leave a lot of money on the table — but oftentimes, no one in the front end is aware problems exist until someone from the back end tells them a denial occurred. To identify where improvements are needed, teams must have better insight into the process overall, he reiterated

The key is to build programs that connect the dots and show where money is going and whether it’s being lost. In an environment of high employee turnover, creating processes that are “people independent” is critically important. To protect the organization, revenue cycle teams must develop processes that are simple enough that anyone can complete them.

Payer performance management is another effective way to optimize reimbursement. One important aspect of this strategy is analyzing the chargemaster. “You need to look at pricing and charges which are tied to your chargemaster,” Mr. Moorthy said. “Organizations, should not only look at utilization for certain services to determine prices, but also compare their prices for those services to other providers in their market. Price transparency is a hot topic in healthcare right now and you want your prices to be in line with competitors, if not better.”

A second key element in payer performance management is examining the clauses embedded in the terms and conditions of payer arrangements. These may state explicitly when bills will be paid. “This is something that providers must scrutinize by leveraging revenue cycle reports by payer before going into managed care negotiations,” Mr. Moorthy said. The information in payer manuals also needs to be understood by the RCM team. These documents usually stipulate important rules and regulations related to claims processing, which can impact collections.

Taking a closer look at revenue cycle reporting is very integral. Consider whether reports provide actionable information that will help improve business processes. Knowledge about denials is only as good as the team’s ability to do something with it. Ideally, reports will shed light on not only payer performance, but the cause of denials, such as staff turnover, employee training or process problems.

“If you look at the trends in denials management reports, they haven’t changed for the last five to ten years,” Dr. Kandiyil said. “You have to ask the question, ‘What are we doing wrong and why aren’t we moving the needle?’ Is it a payer problem, a people problem, a process problem or a combination?”

Strategic sourcing is worth evaluation by organizations of all sizes. Although outsourcing and offshoring have typically been adopted by the largest health systems, tier 2 or tier 3 hospitals should also take a look.

Data can reveal gaps in people, process and technology

Just as it’s important to take a holistic approach to the revenue cycle overall, it’s also critical to look holistically at revenue cycle metrics. Most teams use analytics in a siloed way and they don’t tie together.

“At an organization I worked with in the past, two divisions didn’t talk to each other and they were doing the exact same thing,” Dr. Kandiyil said. “The role of analytics is to better the departments. Information must be shared across departments so everyone has visibility into the upstream and downstream impact of what teams do on a daily basis.”

While descriptive analytics are good, prescriptive analytics are even better and these are what providers must strive for. By using prescriptive analytics, hospitals and health systems can forecast what’s coming down the pipeline and leverage these insights for future planning. With payer performance management, for example, teams can use analytics to determine how much reimbursement they are receiving currently on a regular basis from different payers and then create a plan of action based on any financial forecasts.

“If you have a high percentage of yield for a certain payer, you’re doing well in that current reimbursement arrangement and if it’s low, there’s a problem,” Mr. Moorthy said. “That’s a sign that you need to have a conversation with that payer in upcoming negotiations.” He added another interesting metric to consider, percentage of accounts receivable for reimbursement from payers, which many providers look at from an operations perspective — but can also shed light on payer relationships.

Reliable, trusted partners enable healthcare organizations to achieve their RCM goals.

Many elements of the revenue cycle have become commoditized, so when it comes to partnering, organizations often find themselves in a race to the bottom to find the cheapest alternative. This is bad for the revenue cycle and for employees. Dr. Kandiyil reflected on how organizations frequently make short-term, one-off changes to revenue cycle processes rather than implement what is actually needed: sustained improvements on a continuous basis.

The greatest opportunities to maximize the revenue cycle lie with a reliable and trusted partner. “When we work with hospitals and health systems to identify RCM solutions, we work to become their partner,” Dr. Kandiyil said. “Our objective is to examine the revenue cycle through a single lens. We determine whether you are getting your money’s worth for your investments in people, processes and technology, and recommend how you can improve.” 

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