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One Healthcare RCM Leader Shares his Perspectives on Navigating the Shifting Landscape

October 16, 2017
by Heather Landi
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Ongoing changes in both public and private payment are shifting the landscape around revenue cycle management these days, and U.S. physicians and hospitals are facing considerable impacts on their healthcare reimbursement.  In a Special Report published in Healthcare Informatics’ September/October issue, healthcare finance thought leaders shared their perspectives on the rapidly changing landscape around revenue cycle management and the importance of developing a robust RCM strategy.

For that Special Report, Associate Editor Heather Landi interviewed Brian Sanderson, managing principal of the Chicago-based Crowe Horwath LLP healthcare services group. Prior to joining Crowe, Sanderson was a partner at Ernst & Young LLP for seven years and a senior manager at Arthur Andersen LLP for six years. He was also a manager for Northwestern Memorial Hospital (Chicago) and Hinsdale Hospital (Hinsdale, Ill.).

In that interview, Sanderson shared his perspectives on the challenges facing healthcare finance leaders and strategies to help CFOs most effectively address those challenges. He also touches on the importance of optimizing technology to improve RCM, how automation is coming into play, and the role of the CIO in all of this. Below are excerpts from that interview.

What are the most significant challenges healthcare provider organizations are facing right now with regard to revenue cycle management?

The first is that there are a number of “revenue at-risk” reimbursement models being put into place, whether it be bundling, whether it be pay-for-performance or certain types of services that are tied to quality metrics, a higher percentage of third-party reimbursement is tied to these things, so it’s hard for revenue cycle management to understand exactly what they should be paid and then build processes around them to ensure that they get 100 percent of that payment. Second, the margins are getting very, very thin with respect to hospital operations. There’s a lot of cost pressure on revenue cycle organizations to ensure that their “cost to collect” is as lean as possible. Unfortunately, when the contracts are more complicated and they are asking you to do more with less, there’s a bit of a disconnect there. It’s hard for RCM organizations to staff down and still retain performance.

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The third thing is there’s a division here between centralization and de-centralization that each organization must understand. The far end of centralization is outsourcing it to an R1, to a Conifer Health Solutions, to an Optum; that is unique centralization of the revenue cycle function and then you ship it out to somebody to handle it. The other side of that is decentralization, where, within health systems or within physician practices, a lot of the core revenue cycle practices happen at the site, whether it be registration or collections. You, as an organization, need to figure out what works best for you to get the best performance at the lowest cost. There is no secret sauce there.

With the advancement of developments surrounding MACRA and potential cuts to Medicare and Medicaid, how is this affecting the current moment in healthcare revenue cycle management?

There is an enormous amount of uncertainty right now, but most of the angst that we’re hearing is in the office of the CFO. There’s a lot of uncertainty relative to what is my revenue is actually going to be, what do I expect my revenue to be, what do I want it to be, what do I project it to be and what do I manage it to be? So, there’s all that uncertainty and then it drops down into the various pieces that affect revenue and report to the CFO; one of those is managed care contracting, another one is reimbursement, and then also revenue management. There is a lot of pressure on the revenue cycle operators to make sure that they collect every last penny that they are due.

What should CFOs and revenue cycle management leaders be focused on right now?

It depends on what kind of system they are. If you are a huge national system, then you’re going to make different decisions than if you are a small regional system, and you’re going to make different decisions if you have a physician enterprise. And, that is a big challenge for a lot of health systems; they struggle enough to handle their revenue cycle management, never mind the doctor’s stuff and the implications of physician compensation tied to collections.

I have three pieces of advice: number one, you need real-time transparent measures of revenue cycle performance that give you sufficient time to enact change precisely. What we’ve generally seen is month-end reports or quarter-end reports that the CFO doesn’t completely understand or doesn’t know what to do about. You need real-time information to make real-time change. When UnitedHealthcare decides that they are going to start denying a particular type of orthopedic service, you don’t want to find out in six months, you want to find out right away.

Second, you need to decide how centralized you want this to be. There are places where the back-end reports to finance, and the middle revenue cycle reports to the chief medical officer, and the front-end, such as patient access, reports to the chief operating officer. Whatever it is you decide is best for your organization, then stick with it and create accountability. I think the direction that we’re going, particularly for health systems of some size, is that there will be a chief revenue officer that will report to the CFO and that chief revenue officer is responsible for all things revenue cycle and revenue related.

Third, you really need to get some commonality of technology. For a health system now, they have four different bolt-on systems at various sites that are supposed to be feeding to one place, but they don’t. They don’t interoperate. My advice is, if you’re Epic, go all Epic; if you’re Meditech, go all Meditech. If you’re going to decide on a particular utility, it has to be able to scale with how you as an organization are scaling. You take the concept of best-of-breed—if they are not interoperable with your revenue cycle, if they just produce different kinds of things that somebody on the back-end needs to put together, then that doesn’t work.

Are you seeing more organizations leveraging IT to optimize revenue cycle management?

What we’re seeing as an industry is the integration of more technology, period—clinically, operationally, strategically, financially. If you look back at any industry that has consolidated in some regard, there is always the integration of technology to improve efficiency; automation is the next phase. But technology is getting better, so organizations are able to use tools to ensure patient registration accuracy, to collect on accounts, to score patients’ propensity to pay, there are a lot of tools out there. The issue is that a lot is them are disparate; you’ve got 42 different bolt-on tools and you are trying to get them to work together to improve performance. There are folks that do that and do it well. There are a lot of folks that struggle to optimize the use of their tools. Just because you buy it doesn’t mean you get the most value out of it.

What is the role of the hospital or health system CIO in all of this?

We spend most of our time with the CFO, so the biggest disconnect that we see in the marketplace is the disconnect between finance and the revenue cycle. Revenue cycle is doing these things, and finance either isn’t seeing it hit their financial statements or there may be something a revenue cycle leader does that negatively affects finance, so those two disciplines need to work more closely together. We call it bridging the gap between finance and revenue cycle. Secondly, our read to the CIO and CFO, the disconnect that we see most frequently is technology support, and not necessarily the utilities or the capital purchases, those tend to have a rigorous process for selection that I would think that the CIO and CFO would be together on. However, there is a disconnect around the technology support that is updating the utilities, getting ad hoc and meaningful reporting as changes occur in the payer setting. You need to have somebody that can go in and recalibrate their system. That’s where the biggest disconnect is. We think there need to be dedicated technology resources, and that could be a dotted line up to the CIO, but it needs to be a direct line up to the CFO.

Do you have any additional thoughts?

A couple of things: first, regardless of where the current political climate takes reimbursement, there is going to be more revenue at a risk. There’s going to be accountable care organizations, there’s going to be population health, there’s going to be contracts that have quality imbedded, so it’s going to get more complicated for organizations to understand what it is they should be collecting. Second, we see, on the short-term horizon, a drastic integration of automation, or what we call RPA, robotic process automation, that’s going to take a lot of the core tasks of account follow-up and related things, rote tasks, and those are going to be automated. And those are the things that we’re working on now, that we see the responsible parties for RCM most interested in, because that’s going to decrease costs.

 


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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.

Related Insights For: Revenue Cycle Management

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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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