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CIOs Beef Up Their RCM Operations in the Post-Reform World

July 25, 2013
by Rajiv Leventhal
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With declines in patient revenue and cash on hand, healthcare executives have been searching for ways to improve the revenue cycle process

As healthcare reform-related reimbursement pressures continue to intensify, the pressure on patient care organizations has mounted, making it critical for them to execute a thorough and efficient revenue cycle management (RCM) system.

Today, hospitals, medical groups, and integrated health systems are facing the twin burdens of Medicare and Medicaid payment changes stipulated by the Affordable Care Act (ACA)—estimated to trigger more than $150 billion in reductions over the next 10 years—in addition to the specter of additional cuts from the Budget Control Act of 2011. Most hospitals have long deployed automated systems to address core processes around RCM, but  these legacy IT applications often have out-of-date technology platforms that lack the advanced functionality needed to address new models of care delivery and reimbursement. In addition, the complexity of medical billing and collections has created fragmented workflows across the patient accounts pathway, resulting in gaps and inefficiencies that lead to lost revenue, according to new research from consulting firm Frost & Sullivan.

That research has estimated that the RCM industry is expected to grow significantly in upcoming years; RCM applications and services in U.S. hospitals are predicted to increase in value from $1.9 billion in 2012 to $3.07 billion in 2017, representing more than a 61 percent increase over five years.

Denied billing claims—mostly due to patients being ineligible—accentuate the need for a sound RCM system. Patients who receive care, but end up not qualifying for coverage and cannot pay out of pocket, can cause hospitals and physician practices to lose money, which when added up, and can result in financial burdens to the organizations.

What’s more, managing denied claims can also rack up expenses. Having an up-to-date medical billing service is essential for staying on top of various ACA provisions as well as other laws that deal with healthcare.

The trick about revenue cycle is that it really is a-rip-and-replace solution, says George Hickman, executive vice president and CIO at Albany Medical Center, northeastern New York’s only academic health sciences center, which incorporates the 651-bed Albany Medical Center Hospital. “On day one when you flip the switch, everything has to work if you’re going to get bills out and keep everything working the way it’s supposed to. Here, we had to pull back, clean it out, and then roll it out again. To prepare for that, the team has to be highly integrated in terms of how it behaves to pull this off, and there has to be a lot of accounts receivable and cash collection work,” says Hickman, who is chairman of the board of the College of Healthcare Information Management Executives (CHIME).


The key to a successful RCM system is that it starts the moment a new patient asks for a consultation or his or her first visit with a healthcare provider, and ends when that person’s balance equals zero. But healthcare reform and the push for deficit reduction are forcing hospitals to address long-standing inefficiencies and shortfalls around the RCM process, driving the market for a host of next-generation RCM solutions.

Ellis Medicine, a Schenectady, N.Y.-based 438-bed community and teaching healthcare system, for example, was able to connect three hospitals, including about 25 physician groups, on a single-enterprise revenue cycle solution from Malvern, Pa.-based Siemens Healthcare. “The idea behind the search for an enterprise-wide product was that we wanted a single-source product for all of our clinical information, financial information, as well as the implementation of a centralized business office,” says David Snyder, Ellis’ CIO. “As part of that implementation, it was key for us to have a single enterprise revenue management solution, so there is one call-in point for our customers. This allows them to get all of the data about any of the stays/services that were performed throughout the entity.” Ellis has been able to minimize disruption to its cash flow and has been able to keep the days that accounts stay in accounts receivable (AR) far lower than their pre-implementation baseline, says Snyder.

David Snyder