Nearly half of the nation’s 5,000+ hospitals are losing money for every patient they see and many are at risk of closing their doors in the next 18 months. Regardless of how worthy, hospitals simply cannot execute their mission if they do not have the funds. Declining reimbursements, changes in reimbursement models, and an increased complexity in the types of quality reporting required by payors and the government have placed unprecedented pressure on the shoulders of health care providers – making opening a new hospital, hiring a new doctor, or purchasing more medical equipment impossible without the proper cash flow in place first. Health care providers must adopt solutions that work across the entirety of the revenue cycle – in the form of technology or technology enabled services – to drive revenue.
Value-Based Care and Declining Reimbursements
Giving providers an incentive for delivering the best possible care, the switch to value-based reimbursement has effectively turned the traditional health care compensation program on its head. Rather than being paid for the volume of procedures performed, payment is now determined by patient outcome and satisfaction. With penalties scheduled to take effect in 2017, this modification will pay more to physicians who provide quality care at a lower cost to Medicare, and will reduce payments to physicians who conduct more Medicare-billable services without improved patient results.
So far, the switch has not been easy, given the difficulty of tracking success within the pay-for-performance model. Few providers have the technology necessary to track a wide variety of quality measures and analyze the data required. Health care organizations now need to be able to measure, on a continuous basis, the services provided plus how well they were executed, while also aligning price, process and payment.
Without the appropriate analytical insight, providers run the risk of learning their reimbursements will be low, long after they have the ability to react to the news. Ideally, the provider is informed well in advance in order to improve performance consistently, rather than scramble, or worse, miss the opportunity for action altogether. Being able to identify the cause of the failure is vitally important for providers that do not meet quality standards, in order to revamp and maintain quality performance.
Maximizing Revenue Across the Revenue Cycle
These game-changing initiatives have demanded a solution beyond the reach of existing electronic health records (EHR); as the systems do not provide complete history of a patient’s health or store the large volumes of necessary data in the new value-based care environment. Currently, EHRs alone are simply not sophisticated enough to help providers solve business issues and make more informed business decisions.
Proper management of the entire revenue cycle – encompassing the patient journey, beginning at patient access and concluding when an organization has been accurately paid for its services – is necessary in order to compete in the changing health care environment and ensure an accurate, steady revenue stream. Since any step in the health care revenue cycle can impact the next, one small error in the early stages has the potential to erupt into an expensive mistake down the line. For instance, even when providers take care to submit accurate claims to payors, denials still happen regularly and can put a major strain on cash flow. It is imperative that data be collected and each denial be analyzed to determine the reason for the rejection, something that few health care organizations have the resources to accomplish consistently.
A number of savvy providers have opted to enlist third party solutions to facilitate the coordination of patient financial and clinical care, and provide strategic insights in order to ease the value-based burden and maximize profit.
It is no surprise that this type of strategic partnership is a growing trend; studies have shown those that outsource and properly manage portions of the revenue cycle can actually expect to steadily increase the amount they can collect — through both reimbursements and patient payments. In many cases, shifting responsibility for many of the business functions also means that hospitals or practices may regain the ability to focus on providing greater value to the patient. Having the capacity to assign the most valuable resources where they are needed most can translate into increased patient face-time and an overall enhanced patient experience.
The advantages extend beyond administrative functions, as well. Outsourcing with the right vendor means gaining access to business technology that makes advanced data analysis and benchmarking possible. Experienced vendors with industry specific knowledge and business insights across the revenue cycle will efficiently pinpoint areas that require improvement in comparison to competitors, and offer solutions to improve in those areas.
Those that utilize “single point” providers to enhance a single segment of their revenue cycle run the risk of operating in silos and applying disparate point solutions, which may actually worsen the problem and deliver marginal results; utilizing several point solutions often creates a loss in interoperability with several systems that do not effectively interface with one another. When services and technologies do not work collaboratively, the outcome often lacks accountability and standardization. Thus, it may be more effective to take a holistic approach, outsourcing the entirety of their revenue cycle needs to one vendor, particularly one that understands and can address gaps between technologies or different segments of the revenue cycle.
The Bottom Line
The easy fixes of yesterday will not be enough in the current health care environment as incremental improvements will not promote the long-term sustainability necessary to thrive.
Hospitals and practices are now forced to respond strategically and demand a more transformational solution for the revenue cycle. Many providers are opting to partner with third
party firms in order to shift responsibility of administrative functions and gain the intelligence necessary to provide better patient care and quality reporting.
When selecting a partner, seek out a firm with skilled experts who understand the inner workings and core operations of the hospital system, and are able to address key dependences between people, technology and different segments of the revenue cycle. The right partner can accurately assess the current revenue cycle status, in order to develop an optimization roadmap that is sustainable for the long term.