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RCM in the New Healthcare: How Hospitals and Health Systems are Adapting to Change

July 28, 2016
by Rajiv Leventhal
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Last month, to supplement the Healthcare Informatics 100 list of top earning health IT vendors, our editors further broke down the top revenue earners in seven product segments. For the Financial Information Systems category, Scott Pillittere, vice president of Naperville, Ill.-based healthcare consulting firm Impact Advisors, and director of the firm’s revenue cycle management (RCM) practice, gave his thoughts on how the segment has changed. “There has been a large push to implement new electronic health records (EHRs) over the last few years, in which ‘foundation’ solutions were implemented for the revenue cycle with most of the focus being on the clinical side of things. Given this, healthcare organizations were left with revenue cycle systems that would work, just not well,” Pillittere says.

Serving as an extension of that product segment breakdown, Pillittere, tasked at Impact Advisors for the last year with growing the practice and making the firm a major player in the revenue cycle consulting market—and before that holding a similar role at Stockamp & Associates (eventually bought by Huron Consulting Group) for 13 years—spoke further with Healthcare Informatics Managing Editor Rajiv Leventhal about the biggest revenue cycle challenges hospitals and health systems are facing today, RCM’s changing role in the new healthcare, and what organizations need to do to better their revenue cycle strategies. Below are excerpts of that interview.

What are you working on now to help hospitals with revenue cycle?

What’s selling heavy for us now is that a lot of organizations have either [just] gone through a major EHR implementation or are actively going through one. Or, they are still feeling the pain from going through one five years ago. In all three of those settings, we are selling a team coming in to help transform that revenue cycle into a new environment. And that can mean several different things around optimizing what they put in place, and not just optimizing the system but everything around it. It goes back to the four core bubbles: people, process, technology, and culture change. You need to hit on those pieces to advance them in their financial performance.

When you say the “new” environment and RCM’s role in it, what are you specifically referring to?

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Most of the conferences you go to now talk about value-based payment and what will happen in the future. I still find that there is very much a “back to the basics” need in the industry. The environment has changed, and people are not quite sure what to do in it, so they just want to get back to the basic blocking and tackling they were used to be able to manage the revenue cycle. There aren’t as many discussions around “what about value-based payment?” but more around not being able to bill and collect appropriately.

One client we have in Minnesota did create an ACO-focused organization to be an advanced player in it, but I don’t think it ever got fully ramped up. Good data analysis came out of it, but nothing stellar. And they were the only client of mine who even took a step towards something like that. Most of my clients don’t have the appropriate decision support systems or data to be able to provide them with what they need to strategically think about services and reimbursement.

What do organizations need to better transition and evolve?

They need two things: focus and data analytics. When you go live or if you have gone live on a new EHR or revenue cycle system, you generally have the standard report that comes out, but there are so many standard reports that you probably have not gone through and appropriately inventoried to understand what the new reports were going to be and how you were going to use them. Organizations that have been on Epic for four or five years are still trying to figure out “point one,” so they haven’t even advanced to “point two,” which is to prove the data analytical function of “we have a trend, let’s research the trend, understand it and solve it.” But you need the data to understand what’s happening, and they are not at the point yet since they are still scrambling to get what’s needed from upfront.

I was on a call with a CFO recently and they have been live on Epic for about a year, on a community connect model, meaning they are using someone else’s Epic, and they have an 80-report backlog, no one to create reports, and haven’t even thought of the data analytics and what will be required to advance them. One of the things I always recommend is having a data analytics team off to the side of the revenue cycle. They should control it for both the hospital and the medical group, so they can truly understand what’s happening and where they need to go to.

Scott Pillittere

What trends do you see around integrating clinical and RCM systems?

It is happening now, and it usually comes with an integrated solution like you see with Epic. Cerner is trying to get there; that is one of their main sales slogans—providing you with a fully integrated solution. Having the integrated system pushes the issue of resolution ownership further up in the revenue cycle and possibly back to one of the clinical areas. And that’s [new], so there is an education piece and culture change piece needed.

Any time you have integration and it is proven integration, you’re going to have a better success rate of charges transferring and having the information needed in the revenue cycle environment. If a system is integrated both clinically and financially like with Epic, they have done the testing and resolved issues. So in those cases, it’s about working with the technology to make sure it fits into your culture.

Patients are now taking on more responsibility for their healthcare costs. What impact does this have on an organization’s RCM?

Historically, most of the healthcare organization wouldn’t worry about the self-pay component, and wouldn’t really even follow up on it after the fact. Now, the industry is paying more attention to the self-pay balances. Upfront collections have now become much more important, especially from those private-pay patients. Propensity to pay tools are becoming increasingly important, so you are purposely going after patients who will pay rather than pursing every dollar. It’s logic-based follow up in a sense to try to get the payment. Also, I have seen a more strategic use of vendors for the self-pay population.

What are other RCM issues you are noticing at organizations?

When we go in, our main goal is to try to improve the financial performance of the organization. Healthcare organizations continue to see their margins bend, so they have to cut heads, and those are administrative or business operations focused, not clinically focused. So generally when I go into an organization and see their revenue cycle department, they’re usually inappropriately staffed to work the level of accounts they need to work. That’s too common and it will become even more prevalent going forward. Their strategy for how to work all the accounts is no longer appropriately aligned. So they need to come up with a global strategy to decide what to do in-house, and what to use vendors and tools for.

You don’t hear much about ICD-10 anymore, but how has that affected the revenue cycle?

For most of my clients, it wasn’t as big a deal as most people thought it would be. Yes, there was a slowdown in productivity and there was a learning curve. But as I look at my clients’ financial performance, the ICD-10 change didn’t impact it much at all.

Can you give a few parting words of advice for organizations looking to improve their RCM?

You need to have a true revenue cycle strategy. Clearly define who will work what and how you will manage the entire revenue cycle. Secondly, identify the areas where you have gaps in people process, or tools. And then fill those gaps. If you can’t hire resources, that’s where the strategy comes in. I preach the 80/20 rule: 80 percent of the dollars are in 20 percent of the accounts. So your staff should be focused on that 20 percent.

A lot of organizations are of course mission driven, and anytime you get into a mission-driven organization, they are reluctant to change how they screen or accept patients for non-urgent visits. That is a big area that needs to change, otherwise organizations will continue to see their bad debt increase. I often ask leadership, “How flexible will you be on rescheduling if a patient who is self-pay and has the ability to pay, but hasn’t paid up front or isn’t getting back to you?” We do an assessment every time we go into an organization, and you no longer find the “train wreck”; it’s harder to find where those dollars are. They are still there, but it’s not quite the easy, low-hanging fruit that it was a few years ago.


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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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