Healthcare Finance Leader: Why CFOs Need to Work Smarter, Not Harder | Healthcare Informatics Magazine | Health IT | Information Technology Skip to content Skip to navigation

Healthcare Finance Leader: Why CFOs Need to Work Smarter, Not Harder

October 5, 2017
by Heather Landi
| Reprints
Click To View Gallery

In a Special Report published in Healthcare Informatics’ September/October issue, healthcare finance thought leaders shared their perspectives on the shifting landscape around revenue cycle management and the importance of developing a robust RCM strategy. These finance experts pointed out that U.S. physicians and hospitals are facing considerable impacts on their healthcare reimbursement. At the CFO level, healthcare organizations face increasingly thin operating margins, declining reimbursement rates and changing reimbursement models.

For that Special Report, Associate Editor Heather Landi interviewed Sandra Wolfskill, director of healthcare finance policy at the Healthcare Financial Management Association. HFMA is a Chicago-based trade organization for healthcare finance professionals. At HFMA, Wolfskill oversees the association’s Revenue Cycle MAP, or measure applied performer initiative. Prior to her position at HFMA, Wolfskill was president of a healthcare finance consulting firm, and she spent 15 years in healthcare financial management and consulting, including serving as CFO of a small community hospital.

Wolfskill spoke with Landi about the current and evolving payment landscape facing healthcare finance leaders, what CFOs should be focusing on right now, how organizations can leverage IT to optimize revenue cycle performance and the role of the CIO in all of this. Below are excerpts from that interview.

What are some of the challenges that healthcare finance leaders are facing right now?

At the high level, CFOs are being challenged by a lot of stress on operating margins, which is another way of saying profitability. Reimbursement rates are declining, in most cases, and so it’s the struggle with ‘How do I bend the cost curve to continue to be viable in this environment where I am seeing payer mix shifts going from the commercial world over to the government world?’ And that is being influenced by the Baby Boom generation coming off employer-based health plans and moving into the Medicare world, be it through traditional Medicare or Medicare Advantage. There’s also the impact of the changing reimbursement models, whereas we’ve lived in a fee-for-service world, for a very long time, and so the emphasis was on volume, such as how many chest x-rays, how many MRIs, could I do? In the value-based world, we now are confronted with the issue of risk, and if we assume risk in our contracts with our payers, how do we control for that risk and how do we manage that risk?

An example of a risk contract that’s been around for a long time is capitation, where I get paid PMPM (per member per month) fees for providing services to the individuals covered under those plans. If I don’t calculate my risk correctly and negotiate my risk component correctly, I could end up losing a lot of money on contracts like that.

In the revenue cycle management world, what I’m hearing from colleagues is that there is a huge need to not lose sight of revenue integrity within the revenue cycle. And that’s probably the number-one or number-two concern that most revenue cycle leaders have. And what we mean by revenue integrity is making sure that we have classified and are charging for services correctly; that the services we do provide are actually documented in the patient’s electronic health record (EHR), that we have charged for them appropriately, that we have coded them correctly and that we have been paid correctly by the payer. Revenue integrity is an issue that touches across multiple areas within the organization.

The second big challenge is denials. I send claims out to my payers, and do they pay me or do they issue a denial? And how do I mitigate and reduce the amount of denials that I have to deal with on a regular basis? We’re seeing some organizations doing some very interesting things. They are having conversations with the payers, and saying ‘If you’re always denying this device, can we come up with way that you can see the patient’s record, in a secure and encrypted environment, and decide right then and there if you’re going to find the medical necessity that you are looking for and you’ll pay it?’ As opposed to, the payers denying it automatically, then the provider organization sends the records, the payer then agrees that it should be paid, and pays it, which takes more time and resources to accomplish. So how can we streamline? How can we cut the cost of transactions and cut the cost of billing and collecting, but also allow the payer to protect their interest and allow us, the hospitals, to be paid appropriately for the things that we do?

The key for RCM is the same as it’s always been and that is to correctly identify the patient and the insurances that are involved with that patient. A perfect example is population health, whereby a patient might be enrolled in a population management plan that looks, on the surface, like a regular Blue Cross plan, but it may have a population management component. If don’t get the patient into the right Blue Cross plan when we register the patient, then the physicians downstream may not immediately recognize that the patient is part of a different treatment modality, which means they need to do different things, need to document different things in the record. Then, the payment system isn’t going to work correctly and they are not going to be paid appropriately for what they are doing. The impact is that we just must get better and better at linking the patient and their plans together appropriately.

When you look at the federal payer side of this issue for hospitals and physicians, what do you see?

More and more of the patient population is moving into Medicare coverage; that’s a by-product of the age demographic in this country and that’s going to continue for a while. That’s putting a fair amount of strain on the trust funds. That’s why there is a continued discussion around how do we sustain the Medicare programs and how do we sustain the Medicaid programs.

On the Medicaid side, what we’re seeing in the expansion states is more patients coming into the hospitals, because they have insurance, and, in a lot of cases, what we’re hearing is that providers are able to engage those patients earlier before something becomes a chronic, ongoing medical issue. And, so, overall, the patient’s health is impacted positively and you can avoid moving into more severe situations. And, the hospitals are getting paid for providing services which they probably wouldn’t have provided because the patient would ultimately have come into the emergency room (ER), when a chronic condition becomes acute. It relieves some pressure on ERs, and actually allows patients to get better service and allows patients to have coverage; it gets them into the system and into places other than the ER.

In terms of private health insurers, what is the landscape for revenue cycle management right now?

I think the thrust that I’ve seen from the commercial payers is that they are wanting to work smarter; they understand that they need efficiencies, just like we do on the provider side. The commercial payers want more automation; the more things we can do electronically, in terms of information exchange, the better. I think the biggest movement we’ve seen in the past 12 months is a willingness to move ahead with electronic processing for pre-authorizations for service. That was one big area that was very much a manual, or a fax-based, process for a long time. And, more recently, we’re seeing a lot of movement on the payer side as well as the hospital side to automate that, use the transaction standards, move the information back and forth electronically.

Many organizations are leveraging IT to optimize revenue cycle management. What is the role of the hospital or health system CIO in all of this?

I think they need to be engaged with the CFOs and understand the automation and technical resources that are out there to eliminate manual work within several areas of finance, but especially within RCM. Where can things be automated beyond where they are today? If the product or technology is not available within the core processing system that the hospital or system is using, is there a bolt-on out there that will solve this issue and will let me automate and be much more effective and efficient in how I process activities within the revenue cycle? It’s playing a very proactive support role of trying to look at revenue cycle, because a lot of revenue cycle is transactions, pure and simple. So, how do I automate them? How do I pull out and only use people when I need to on an exception basis to fix the things that the machines can’t fix?

With the evolving payment landscape in healthcare, what should healthcare finance leaders focus on right now?

They should be looking for ways to work smarter, not harder. They should be trying to stay ahead of the pressures that the industry is facing to bend the cost curve. So, they should be looking very closely at cost accounting systems and understanding where they can reduce cost and not compromise quality or safety.



2018 Raleigh Health IT Summit

Renowned leaders in U.S. and North American healthcare gather throughout the year to present important information and share insights at the Healthcare Informatics Health IT Summits.

September 27 - 28, 2018 | Raleigh


Executive Brief: Using Digital Technology to Streamline Claims Management

Please register to download

In the past few years, numerous audits and investigations have turned up millions in:

► provider overpayments
► incorrect reimbursements
► lost money

Taken together, the costs of delayed, pended, or error-ridden claims add up quickly—and the amounts are staggering.

More From Healthcare Informatics


MGMA: Physician Compensation Data Illustrates Nationwide PCP Shortage

May 23, 2018
by Rajiv Leventhal
| Reprints

Primary care physicians’ compensation rose by more than 10 percent over the past five years, representing an increase which is nearly double that of specialty physicians’ compensation over the same period, according to the Medical Group Management Association (MGMA).

Officials from the Colorado-based MGMA, attested that the data “is further evidence of the worsening primary care physician shortage in the American healthcare system.”

A closer look at this data—the 2018 MGMA DataDive Provider Compensation—shows that this rise in compensation is not necessarily tied to an increase in productivity. When broken down by primary care focus, family medicine physicians saw a 12-percent rise in total compensation over the past five years, while their median number of work relative value units (wRVUs) remained flat, increasing by less than one percent. Practices offered more benefits to attract and retain physicians, including higher signing bonuses, continuing medical education stipends, and relocation expense reimbursements.

The data for this survey was based on comparative data from more than 136,000 providers in over 5,800 organizations.

“MGMA’s latest survey has put strong data behind a concerning trend we’ve seen in the American healthcare system for some time—we are experiencing a real shortage of primary care physicians,” Halee Fischer-Wright, M.D., president and CEO at MGMA, said in a statement. “Many factors contribute to this problem, chief among them being an increasingly aging population that’s outpacing the supply of chronic care they require. And with a nearly two-fold rise in median compensation for primary care physicians over their specialist counterparts and increased additional incentives, we can now see the premium organizations are placing on primary care physicians’ skills to combat this shortage.” 

Further supporting this trend, the new survey identified meaningful growth in compensation for non-physician providers over the past 10 years. Nurse practitioners saw the largest increase over this period with almost 30 percent growth in total compensation. Primary care physician assistants saw the second-largest median rise in total compensation with a 25 percent increase.

The research also revealed that over the past five years, rises in median compensation varied greatly by state. In two states, median total compensation actually decreased for primary care physicians: Alabama (-9 percent) and New York (-3 percent). Many states saw much larger increases in median total compensation compared to the national rate, the top five being Wyoming (41 percent), Maryland (29 percent), Louisiana (27 percent), Missouri (24 percent) and Mississippi (21 percent).

Related Insights For: Revenue Cycle Management


Survey: Healthcare Orgs with Multiple RCM Systems Have More Challenges with Denials

May 15, 2018
by Heather Landi
| Reprints

More than two-thirds of health systems (about 70 percent) use more than one vendor for revenue cycle management, and those organizations that do use more than one solution report larger issues with denials, a recent survey found.

For the survey, Dimensional Insight, an analytics and data management solutions company, collaborated with HIMSS Analytics to poll 117 senior-level decision makers in hospitals and health systems, including CEOs, CIOs, directors of IT and finance and heads of revenue cycle management. The survey examines the state of revenue cycle management, and highlights the difficulty in integrating data, and the impact it is having on revenue collection.

The survey found that more than two-thirds (70.9 percent) of hospitals use their EMR solutions for revenue cycle management. In addition, most hospitals utilize multiple vendors for RCM purposes. This is true of hospitals that leverage their EMR for RCM and those that use other solutions.

The survey also revealed relatively low levels of analytics-based automation in RCM, with 36 percent of hospitals say less than a quarter of their revenue cycle process is automated using analytics. Another 24 percent report that 51 to 75 percent of their RCM process is automated.

As healthcare delivery continues to evolve, hospitals are struggling to make the most of their revenues. The shift to value-based care, increased patient pay, and a flurry of mergers are creating new challenges within the financial ecosystems of health systems. Many organizations are looking for ways to improve their revenue cycle management.

According to the survey respondents, denials continue to be the biggest RCM challenge for health systems today, cited by 76 percent of respondents. Healthcare senior executives also identified revenue integrity (37 percent) and patient pay (34 percent) as top RCM challenges.

Organizations using more than one vendor mostly report bigger issues with denials than those using one RCM solution. Close to 70 percent of health systems using three or more vendor solutions report that denials are their biggest challenge, with only 63 percent of health systems using one vendor solution said denials topped the list of challenges within revenue cycle management. The highest rates of problems with denials (100 percent) were reported by health systems using their EMR plus one or two other solutions.

What’s more, nearly all respondents (98 percent) say collecting data from disparate sources is a challenge for revenue reimbursement. Of them, 65 percent said it was moderately challenging, while 33 percent said it is extremely challenging. The survey also asked health systems which areas within the revenue cycle posed the biggest challenges for collecting data. Performance tracking (27 percent), inability to identify billing errors (25 percent), and keeping up with variances (24 percent) were the top three responses, with another 14 percent citing difficulty monitoring trends.

And, 96 percent of health systems say the way data is collected is a challenge, with 58 percent calling it a moderate issue and 37 percent citing it as a big issue.

The survey drilled down into how disparate data sources can contribute to issues with revenue integrity. About two-thirds of healthcare senior executives cited “lack of interoperability” as an ongoing issue, and the same percentage cited “some systems are left in silos” as an issue that impacts revenue integrity. Another 30 percent of respondents cited another issue—“key stakeholders do not trust the data.”

The survey also examined organizations’ RCM governance processes. A majority of hospitals of all sizes reported that their RCM governance is centralized. Overall, 69 percent of hospitals have centralized RCM governance, with the highest percentage (73 percent) among hospitals with more than 500 beds and the lowest (50 percent) among hospitals with 50 – 100 beds. Overall, 16 percent report having no RCM governance process. The bigger the hospital, the less likely it had no RCM governance in place

The report authors concluded that health systems are struggling with interoperability, and the associated challenges have effects throughout the enterprise. “The survey revealed a patchwork of solutions, an arrangement that does not seem to be working particularly well. In addition to highlighting the challenge of collecting and integrating data from disparate sources, the survey shows a real financial impact. Lack of interoperability does not just affect clinical and operational decisions. It is hurting the bottom line. Health systems need solutions to bring data together and make it useful throughout the entire revenue cycle,” the report states.

 “Many hospitals and health systems are undergoing mergers in hopes of increasing efficiencies. Or they implement several different technologies as band-aids to compensate for the deficiencies of systems,” Fred Powers, president and CEO of Dimensional Insight, said in a statement. “Unfortunately, what they’re finding in many cases is that the different technology systems in place are hard to integrate, and now this is impacting the bottom line.”


See more on Revenue Cycle Management