Hospitals are readying for a myriad of changes. The pressure is on for hospitals to navigate numerous challenges successfully. Between health care reform and hospitals’ increasing bad debt, health systems truly need to alter their revenue cycle management (RCM) to ensure they maintain their bottom lines well into the future. According to Healthcare IT News, sticking with traditional RCM costs both inpatient and emergency service environments valuable revenue that could be making all the difference to their financial health.
“It costs 20 to 30 cents on the dollar to cross a trade in health care – to take the money from the buyer of healthcare, the self-insured employer, and put it into the pockets of the providers of health care,” Sean Wieland, managing director and senior research analyst at asset management firm Piper Jaffray, told Healthcare IT News. “If any other industry had a revenue cycle like that, we’d all be living like the Amish. Wall Street crosses a trade for fractions of a penny.”
Hospitals think they are proactive
Hospitals’ RCM is weak just at the time when their revenue cycles need to be stronger. Many hospitals said in the past that they understood their RCM solutions were broken, and were taking the appropriate steps to fix their RCM issues. In 2011 research firm KLAS found that 87 percent of surveyed hospital executives said they planned on changing their RCM systems within three years, Healthcare Finance News reported. The study “Seismic Shift in Revenue Cycle Management: Market Heading Toward Sole-Source Landscape?” found nearly half of surveyed health care providers said they were going to replace their RCM system within five years.
Another study, this one conducted in 2012 by health care technology research and advisory firm CapSite, found 21 percent of the total 390 hospital executives who responded to the survey said they were expecting to replace their core RCM systems within two years, Healthcare Informatics reported. However, 63 percent said they weren’t planning on changing up their RCM systems. Compared to a previous CapSite survey, more executives started to say they didn’t need to change up their RCM solutions. With the health care community currently in the midst of sweeping changes, one would think hospital executives would understand now isn’t the time to stop improving.
Part of the reason why fewer hospitals are upgrading their RCM is because they may have already done so or they may not want to alter their existing RCM vendor relationships, according to Healthcare Informatics. Many hospitals decide to simply have their revenue cycle within their electronic health record (EHR) systems, Gino Johnson, senior vice president and general manager of CapSite, suggested to Healthcare Informatics, because doing so is easier for hospitals.
Yet health system administrators may be choosing the wrong way to streamline their RCM. Choosing an RCM solution because it is the easiest is not going to be a viable practice for hospitals that increasingly need to boost their patient payments, improve their medical billing and enhance their health care revenue cycle.
Why hospitals need to change their RCM
By following the RCM status quo, hospitals are putting their financial futures in jeopardy because they aren’t receiving adequate payments and aren’t evolving with consumer driven health care. Too many hospitals consider RCM an in-house necessity, i.e. away from the patients and therefore the patient experience. According to EHR Intelligence, health system administrators need to understand their revenue systems are integral aspects of their patient engagement and satisfaction. In fact, EHR Intelligence notes “the revenue cycle starts the moment patients walk through the doors of your organization – and that is just the beginning.” For hospitals to remain competitive during this critical time in health care, they need to change how they manage their entire revenue cycles.
It’s not all doom and gloom, however. According to Healthcare IT News, a new report by KLAS found more hospitals are beginning to realize they need to reform their RCM processes to transition to value-based care models, which takes patient experience and care quality into account in regard to payments. In fact, the study found 77 percent of hospitals now realize patient accounting and practice management integration are essential aspects of their RCM, despite only 14 percent of vendors currently having these patient experience capabilities.
“There’s a new future for revenue cycle,” John Hoyt, executive vice president of HIMSS Analytics, told Healthcare IT News. “We’ve been nipping away at trying to save money in Medicare for years, but we need fundamental change, and we all know it. And it’s coming in the form of [accountable care organizations] or bundled payments and this type of thing.”
While not all vendors may have the capabilities hospitals need to make substantial changes in the patient experience with RCM, others do. Embracing patient friendly billing, point-of-service payments and online/mobile payments can bring the patient experience to the forefront of hospitals’ RCM. Health system executives need to be proactive when it comes to their health care revenue cycle, and electronic bill presentment and simple, ecommerce influenced payment processing in an easy-to-understand system can help hospitals improve patient collections.