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Chartis Group Consultants: It’s Time for Patient Care Leaders to Rethink Revenue Cycle

April 7, 2017
by Mark Hagland
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The Chartis Group’s Ormand and Bankhead want patient care leaders to rethink how they frame revenue cycle management

Just as every other area of activity in U.S. healthcare is experiencing major change right now, so is the revenue cycle management area. Historically, revenue cycle management was viewed in a very narrow way, as a departmental function within the finance department. Yet a number of factors are forcing a shift in perceptions of this area of activity, and rightly so, say the authors of a new white paper from The  Chartis Group, the Chicago-based consulting firm.

Last month, Kevin Ormand, Thomas Kiseau, Todd M. Bankhead, and Catharine Wilder published The Chartis Group’s white paper in this area. “The Next Strategic Imperative: Rethinking Revenue Cycle Transformation,” looks at the dramatic changes taking place around payment and operations in U.S. healthcare, and how those changes are impacting revenue cycle management.

Among the areas that the authors see as being particularly impactful, the write that “[R]evenue cycle operations across the nation face ever-increasing pressure to adapt, as the healthcare organizations they exist within move to position themselves in the rapidly evolving healthcare context, complicated by new forces such as:

>  The regulatory ‘alphabet soup’ of ACA, MU, ICD-10, MACRA, MIPS, ACO, and VBC [the Affordable Care Act, the meaningful use program, the ICD-10 coding system, the Medicare Access and CHIP Reauthorization Act of 2015, the Merit-based Incentive Payment System, and value-based care]

>  The rapid consolidation of health systems and physician groups, creating entirely new lines of business for which revenue cycle operations are now accountable;


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>  Increased payer complexity (i.e., multiple contract types and new reimbursement vehicles) and new pricing algorithms; and

> The rise of high-deductible health plans and increased patient financial responsibility.

For many organizations, the tidal wave of change in a relatively short period of time has made it even more challenging to manage… the most fundamental attributes and indicators that drive performance,” the authors write.

The white paper’s authors focus on three areas that they believe will be critical for the leaders of patient care organizations: innovation, investment, and integration. With regard to innovation, they write that “Health systems must embrace a necessary (and potentially disruptive) overarching evolutional paradigm shift in conventional revenue cycle practices. Driving this shift is a transformational cultural and environmental change centered on entrepreneurialism and creativity. Such innovation,” they state, “helps to avoid becoming obsolete and creates the ability  to nimbly scale to known and unknown headwinds.”

With regard to investment, they state that “Strategic investments must be made in automation, technological advancements and a robust recruitment and retention program for highly motivated, team-centric and ‘Lean-savvy’ talent. Such investments run counter to short-sighted cost containment exercises by demonstration ROI and recognizing more significant longer-term sustainable reduction in the cost to collect. This ultimately increases net patient services revenue and drives efficiencies.”

With regard to the concept of integration, the white paper’s authors say that “Health systems must move beyond their current view of revenue cycle as a cost center. It is essential to create a holistic governance model that oversees the full integration of revenue cycle, clinical and operational workflows that are truly aligned with patient-centric processes and go above and beyond expected standardization and centralization programs and efforts. The structure,” they assert, “is necessary to avoid being ‘out-gamed,’ outnumbered and at the mercy of payers’ adjudication bureaucracies and denial algorithms.”

Shortly after the publication of the white paper, two of its authors—Kevin Ormand, who is director and leader of the revenue cycle group at Chartis, and Todd Bankhead, who is a principal at Chartis—spoke with Healthcare Informatics Editor-in-Chief Mark Hagland regarding the white paper’s conclusions and their perspectives on where revenue cycle is headed within the U.S. healthcare system. Below are experts from that interview.

It seems as though we’re at a particularly interesting inflection point in terms of revenue cycle management right now, with massive changes in reimbursement triggering the willingness on the part of patient care organization leaders to rethink their approaches to revenue cycle, correct?

Kevin Ormand: I appreciate your acknowledgement that people are starting to step back and say, OK, I get how important this is. Because there was a tendency to oversimplify and commoditize and put it into a little corner and say, we’re providing care, those people are taking care of the revenue. The proliferation of the EHR [electronic health record] has helped people realize the revenue cycle component associated with everything in the EHR. There’s a component of nurses’ and physicians’ documentation that will impact their revenue cycle. We’ve moved into a space of duality, where you still have standard commercial contracts in myriad versions, yet you’re also getting VBP-based contracts; that’s really emphasizing the connections between clinician documentation and revenue cycle.

In the white paper, you talk about the ‘ecosystem’ of the revenue cycle process within patient care organizations.

Ormand: I was a biology major originally, so the terminology resonates with me. Peter Senge’s concepts of the learning and living organization. Historically, we’ve focused on expense management, with multiple feedbacks and managing to a budget. In healthcare, we historically haven’t looked at it from a revenue perspective. In the white paper, we identify four different areas: strategy drivers to revenue, payer drivers, clinical drivers, and your traditional revenue cycle component—those are the four components of the ecosystem. But 75 percent of the success of that fourth group is dependent on those previous three areas. How well are you feeding those processes? All that stuff impacts your ability to bill and collect and get the money back for the great care delivered.

Was there a benefit to the run-up to the transition to ICD-10, in that people started looking at those ecosystem issues?

Bankhead: I would say, certainly that that was helpful. As you established the interdisciplinary groups to tackle ICD-10, that established better connections among the disciplines, so that helped. In the white paper, we established a sense of urgency by talking about three critical imperatives—the three Is—innovation—really getting away from the mindset of revenue cycle as an administrative overhead or cost center—and thinking about revenue cycle as a profit center, and therefore the investments you make in people, training, and technology, being much more strategic and looking at those investments you’d make over time, like an MRI, as opposed to being very hamster wheel-minded. And the other I is around integration, making sure you have the interconnectivity across those elements. Investment was the other I. Investment, innovation, and integration, in no particular order, because each organization has its challenges.

And people are very much looking at it around the cost to collect and the overhead, so there’s still very little investment in people and training. You need to create innovative environments around talent, that’s very entrepreneurial.

What are the most innovative hospitals and health systems doing out there right now?

Ormand: Very few organizations are stepping back and devising a long-term strategy for how they’ll continue to evolve in this space, but there are some organizations that have developed scale through merger and acquisition to really redefine what we call ‘collective insourcing’—how they’ll provide revenue cycle services back to their constituents. But regionalization and standardization of certain functions are among the strategies—with very defined service agreements.

What should CIOs and CMIOs be doing, in terms of working with the CFO and her or his team, and at the c-suite level, to improve how they strategize for and manage revenue cycle management?

Ormand: I think that we can all step back and look at the evolution of the IT department within a health system, within the last 10 years. The way that we support information technology within our provider organizations has progressed and evolved, in terms of skill sets, in terms of discipline; and it’s not uncommon for the IT department to be the true change agent in an organization. That’s both the CIO and CMIO leading that charge. And often, they’re providing the structure of the vehicle, but they’re wanting the department leaders to lead.

They’re being facilitators, in the best way, correct?

Ormand: Yes, and I think they can continue in that facilitation role, in helping to build a vision for the organization in how the ecosystem needs to be supported from a revenue perspective. How we are set up, and where the gaps are. There’s a lot that CIOs and CMIOs can do to help CFOs, and COOs, to create change. It’s hard to change, but first, you have to create a vision of what the organization needs, and include in that the patient perspective. The customer service aspect starts with the registrar, and extends to the last person they speak with at discharge, around customer financial liability. And I think the leadership within the IT space, could really help lead change. You can create a multi-year plan that incorporates those three Is—where do they need to innovate, etc. It’s the message that we’re sharing with our clients, and it’s resonating.

Is there anything that either of you would like to add?

The real call to action stems from the premise that the majority of our revenue cycle operations models just are not well-suited to today’s realities, let alone future needs. And that’s the other side of the coin to what I said: we need to build a vision, but it has to be galvanized by the realization that we’re probably not even meeting today’s realities well.


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Survey: Healthcare Organizations Skeptical of athenahealth, Virence Merger

December 3, 2018
by Heather Landi, Associate Editor
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Healthcare organization leaders are expressing some initial skepticism about the merger of athenahealth with Virence Health Technologies, as a result of Veritas Capital and Elliott Management’s recent acquisition of athenahealth.

Current customers of the two vendors say they are in “wait and see” mode following the merger of the two companies, however, the majority of non-customers say they do not plan to purchase health IT technology from the combined company, according to a new survey from Reaction Data, a market research firm focused on the healthcare and life sciences industries.

The Reaction Data survey gauges how patient care organization leaders are reacting to the acquisition of athenahealth by Veritas Capital and Elliott Management, and the subsequent merger with Virence/GE Healthcare. While mergers and acquisitions in healthcare are becoming the new normal, the merger of Virence/GE Healthcare and athenahealth is unique, the report states.

In July, Veritas Capital acquired GE Healthcare’s revenue cycle, ambulatory care, and workforce management product lines, and then several months later rebranded it as Virence Health Technologies. On November 12, private equity firm Veritas Capital and hedge fund Elliott Management announced the acquisition of athenahealth, the Watertown, Massachusetts-based electronic health record (EHR) and practice management vendor, for $5.7 billion,

Following the deal’s closing, Veritas and Evergreen Coast Capital, a subsidiary of Elliott Management, expect to combine athenahealth with Virence Health. The combined business is expected to be a leading, privately-held healthcare information technology company with an extensive national provider network of customers and world-class products and solutions to help them thrive in an increasingly complex environment, the companies said in a press release.

The deal concludes a six-month acquisition process and a tumultuous period for athenahealth and its leadership. Elliott Management, the sometimes-activist fund run by billionaire Paul Singer, has put pressure on athenahealth leadership to take the company private or explore a sale since the hedge fund acquired a 9-percent stake in the company in 2017.

For the survey, Reaction Data collected feedback from patient care organization leaders about how aware the market is about the M&A event and an analysis on how likely the newly combined company will attract, or repel, new business.

Of the respondents, 22 percent are practice administrators, 18 percent are CIOs, 12 percent are chief financial officers (CFOs) and the remaining respondents are chief medical officers, CEOs, physicians, chief nursing officers, medical directors and chiefs of staff. Thirty-two percent of respondents are athenahealth customers, 19 percent are Virence customers and 49 percent aren’t customers of either company.

While Veritas acquired several important product lines from GE Healthcare six months ago, less than half of respondents (44 percent) were aware of that M&A event. Conversely, the majority of respondents (60 percent) are aware that Veritas and Elliott Management are acquiring athenahealth and plan to merge it with Virence (GE Healthcare).

Looking at overall impact, 45 percent of respondents are neutral on the impact of the merger, while 26 percent expressed a positive opinion and 29 percent have a negative opinion on the merger. Half of respondents who are current customers (51 percent) say they are in “wait and see” mode when it comes to sticking around for the long haul, with the remaining respondents are equally split between leaving (25 percent) and staying (24 percent).

“Reassuring the customer base that integration pains will be minimized and that investment and support will continue will be key priorities for the new ownership team,” the report says.

The rest of the market (non-customers) is another story. As of right now, the majority (57 percent) state they are unlikely to consider Virence or athenahealth for future purchases. Thirty percent of non-customers are in “wait and see” mode.

“While, at present, this certainly isn't an optimistic result, if the new owners execute the integration at a high level, word will quickly get out that the new combined entity truly is greater than its individual parts and the pendulum will swing back in its favor,” the report says.

The report authors also note that skepticism among healthcare organizations is expected among healthcare M&A deals. “Enough of these events in healthcare have gone south that it's perfectly reasonable for customers, and the market alike, to be professionally skeptical about its future. However, it should be noted, that these are two sizable companies brought together by two world-class private equity firms so it is entirely possible that this new company will emerge as a truly formidable competitor to industry titans Cerner and Epic,” the report authors wrote.

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Survey: Providers Remain Challenged with Optimizing Revenue Cycle-Related EHR Functions

November 29, 2018
by Rajiv Leventhal, Managing Editor
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Healthcare providers continue to focus on technology to spearhead revenue cycle improvements, but remain challenged with optimizing electronic health record (EHR) functionality, according to new research from consulting firm Navigant and the Healthcare Financial Management Association (HFMA).

The survey of 107 hospital and health system chief financial officers and revenue cycle executives, released this week, found that 68 percent of respondents said their revenue cycle technology budgets will increase over the next year, down from 74 percent last year.

Results also showed that, compared to last year: 39 percent fewer executives project a budget increase of 5 percent or more; and 53 percent more executives predict no change to their budgets.

However, this slowing of IT spending does not mean providers are satisfied with their current EHR functionality, researchers noted. Fifty-six percent of executives said their organizations can’t keep up with EHR upgrades or underuse available EHR functions, up from 51 percent last year.

Further, 56 percent of executives suggested EHR adoption challenges have been equal to or outweighed benefits specific to their organization’s revenue cycle performance. Both hospital-based executives and those from smaller hospitals cited more challenges than benefits, compared to health system and larger hospital executives. This is likely due to greater capacity and scale in health system and larger hospital IT departments, researchers concluded.

“Hospitals and health systems have invested a significant amount of time and money into their EHRs, but the technology’s complexity is preventing them from realizing an immediate return on their investments,” Timothy Kinney, managing director at Navigant, said in a statement accompanying the survey. “When optimized correctly, a good portion of the ROI can come from EHR-related revenue cycle process improvements.”

When asked which revenue cycle capability their organization is most focused on for improvement over the next year, most executives (76 percent) once again selected technology-related capabilities. Revenue integrity continues to be the top area of focus among them, cited by 24 percent of executives who noted such revenue integrity program benefits as reduced compliance risks, and increased revenue capture and net collection.

The survey results also showed that, compared to last year, EHR optimization as an improvement priority rose from 15 percent to 21 percent, while physician documentation fell from 18 percent to 12 percent.

What’s more, even though providers do appear to be better prepared to address consumer self-pay, the area continues to be an issue, the research revealed. Eighty-one percent of executives said they believe the increase in consumer responsibility for costs will continue to affect their organizations, down from 92 percent last year. Among them, 22 percent think that impact will be significant, compared to 40 percent last year. Executives from health systems and larger hospitals believe their organizations will be more heavily impacted by consumer self-pay.

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CQL in the Cloud: How to Benefit from the New CMS-Required Language

Thursday, November 8, 2018 | 1:00 p.m. ET, 12:00 p.m. CT

Centers for Medicare and Medicaid Services (CMS) will require the use of Clinical Quality Language (CQL) for electronic clinical quality measures (eCQMs) reporting in 2019. But what is CQL? And how can health enterprises actually put it to work? CQL, an HL7 standard, is a new computable expression language designed specifically for healthcare, bringing together the worlds of clinical quality measures and clinical decision support (CDS).

In this webinar we will review the origins of CQL, the value of the language in eCQMs, electronic care pathways (ePathways) and CDS, and how health enterprises can easily get started with CQL by leveraging the benefits of the cloud.

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