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Revenue Cycle Management

March 1, 2005
by Mark Hagland
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Hospital leaders see opportunities and needs in a crucial area.

Johnny Tureaud, director of shared business services at 700-bed, four-campus Genesis Health System, Davenport, Iowa, understands the significance of automation in revenue cycle management (RCM). He and his colleagues began implementing a system last month and expect it to be fully operational by the end of 2005. "We thought we'd gain some real opportunities by having integration between the clinical and financial pieces," Tureaud explains. With a core clinical and operational information system already in place across registration and patient accounting, "we expect to be able to improve charge capture and support documentation."

Genesis is doing what industry experts say all hospitals need to do--optimize RCM enterprisewide. Under pressure to improve charge capture and reimbursement and reduce days in accounts receivable, hospitals need to use every tool available to improve their financial health. And RCM is a key area to address, says Tony Gevo, director of marketing and business development at Omega Health Systems, Tampa, Fla. He notes, "50 percent of all available dollars to be found are from proper attention to revenue cycle management. And of that 50 percent, 60 percent of that 'found' money, if you will, is in the rejection- and denial-management area of revenue cycle management."

Organizations are looking to IT tools to better capture and use data for bottom-line results. "You're going to see a drive toward increased automation or efficiency now, because the pressure on providers is to reduce costs and yet improve quality," Tureaud says. "It's a labor-intensive area back in patient accounting." Automation is the only way to achieve real gains, he adds.

Tools and tool-makers
Hospitals nationwide are moving quickly, hoping to get a good handle on an area that has the interest of CEOs, CFOs and clinician executives alike. According to Michael Biggs, managing director at Navigant Consulting, Atlanta, RCM tools fall into three broad levels of development.

  • "Commodity" tools, already in place in most vendor offerings. Major components are electronic claims submission, claims status inquiry for Medicare, eligibility, query and verification, electronic remittance advice and automated patient billing.
  • Next-generation tools, currently one to three years from being implementated, Biggs says, and the focus of much development. Included are front-end components of RCM, such as referrals, authorizations and pre-certification. And "tightening up the pre-arrival function will be a huge requirement," Biggs says.
  • Emerging tools, still a few years away. Biggs mentions "online real-time adjudication of claims, and Web-based patient portals for statement reviews and for electronic payment processing."

Current RCM programs are "far more sophisticated than they were three, four or five years ago and are getting more so," says Richard LaForge, a principal with consulting firm Chapin Revenue Cycle Management, Tampa, Fla. They are beginning to sweep away the obstacles presented by silos of operation and information in hospital departments.

"The revenue cycle cuts across every area in the hospital, from clinical caregiving to admissions up front," LaForge says. "Virtually every aspect of a hospital's operations has some revenue implications." Now, the best of the RCM systems "have some level of integration so that clinical information is integrated to some extent. And it's forced the management to begin to manage this as a process rather than as a series of departments."

Another factor in RCM is that most vendors are small, niche players. LaForge predicts large-scale consolidation, as well as acquisition of the small mom-and-pop vendors by big core vendors to fill out their offerings.

Plan and deliver
"Being able to get our arms around all the documentation and charging issues, getting all the elements we need that the insurers require so the hospital can receive appropriate reimbursement" remains a huge daily hurdle, says Christina Kocsis, HIM manager and a member of the revenue cycle team at 400-bed Borgess Medical Center, Kalamazoo, Mich. Establish an overall RCM strategy across the hospital and then use automation to deliver on it, she recommends. "You can't just focus on one area."

Marv Addink, CEO of Sioux Falls, S.D.-based SolCom Inc., which supplied an RCM solution to Borgess, agrees. "You need to know what you're trying to accomplish" in tackling RCM, he says. "Don't ask a vendor to deliver something when you're not sure what that is." On the other hand, he adds, "vendors sometimes have good ideas."