The healthcare revenue cycle has many moving parts. From patient access and registration to medical billing and coding, provider organizations of all sizes must achieve revenue cycle efficiency to ensure providers get paid promptly and accurately.
However, achieving revenue cycle efficiency is a major challenge, especially for larger organizations with multiple service locations.
Patient financial responsibility, value-based purchasing, healthcare consumerism, and other major trends are also putting pressure on providers to boost revenue cycle efficiency. Providers rely on more payers and plans than ever for reimbursement, which is also increasingly tied to their clinical and financial performance. Meanwhile, patients are becoming more responsible for care costs.
With operating losses per physician increasing to 17.5 percent of net revenue in 2017, providers must prioritize revenue cycle efficiency to remain financially healthy in the changing healthcare landscape.
Automation is key to streamlining revenue cycle processes and boosting overall productivity and efficiency.
Automate and automate wisely
Healthcare and technology go hand-in-hand. Providers use a wide range of technologies every day to deliver innovative care to patients and document patient encounters.
But the revenue cycle is still paper-based for many providers. In 2016, a HIMSS Analytics survey showed that 31 percent still relied on manual processes to manage claim denials. More recently, the Council for Affordable Quality Healthcare (CAQH) found that providers could save $8.5 billion annually by automating key claims management workflows, such as prior authorizations, claim submissions, and claim payment.
Revenue cycle automation will significantly reduce the administrative burden on healthcare professionals, streamline revenue cycle workflows, and decrease human error and labor costs. However, organizations must implement the right technologies to achieve efficiency.
Most hospitals and health systems in a recent HIMSS Analytics survey reported claim denial and revenue integrity issues stemming from their revenue cycle management technologies. A lack of integration with legacy systems and their EHR created data silos, which was an obstacle for collecting revenue reimbursement.
Provider organizations must invest in revenue cycle management technologies that integrate into established workflows and legacy systems. Otherwise, providers are merely adding another step in an already complex revenue cycle. Organizations must also focus their revenue cycle technology investments on patient access, registration, and other frontend departments to ensure efficiency across the entire revenue cycle.
Focus on frontend improvements to prevent backend pain points
Industry experts estimate that approximately 90 percent of claim denials are preventable. However, providers are not taking steps to prevent claim denials and other backend challenges. In 2017, the Advisory Board showed that hospitals and health systems wrote off 90 percent more claim denials as uncollectable compared to six years ago. That translated to a $3.5 million loss over four years for a hospital with 350 beds.
Improving frontend processes can help providers prevent common errors that lead to claim denials, underpayments, and other backend issues. For example, missing information, such as absent or incorrect patient demographic data, is one of the top reasons why payers deny claims. Providers can prevent common claim issues like this by automating frontend workflows.
Providers and their staff are spending more time on non-clinical, administrative tasks, and manual frontend workflows are adding to their burden. For instance, the most recent AMA Prior Authorization (PA) Physician Survey revealed that providers are spending almost two business days each week completing prior authorizations. Prior authorization automation is lagging across the industry. CAQH reports that manual prior authorizations actually increased from 2017 to 2018.
Automating prior authorizations, benefit verification, patient registration, and other frontend workflows can significantly improve revenue cycle efficiency. Technology ensures staff are collecting the necessary information for the backend, with tools now helping providers collect data before a patient even appears for an appointment. Using technology to verify coverage and demographic data before point-of-service prevents care delays, claim denials, and other backend problems. Providers and staff are then free to focus on items that can boost revenue (e.g., additional appointments, patient collections).
Patient collections and patient financial experience are becoming increasingly important for providers. Bringing these services into the digital era will also improve revenue cycle efficiency and boost the bottom line.
Improve price transparency and patient billing
Healthcare is rapidly evolving, and the next phase involves patients choosing where their healthcare dollars will go. Patient financial responsibility increased 11 percent in 2017, causing average out-of-pocket costs to reach $1,813.
But more skin in the game does not mean patients are paying providers. A recent analysis showed that patient collections rates dropped by as much as 17 percent once patients owed more than $1,200 in out-of-pocket costs. The rise in patient financial responsibility can slow the revenue cycle as providers wait for patients to pay their medical bills.
Providers should realign their revenue cycle workflow with the new patient reality to increase efficiency. Giving price estimates before the point-of-service, offering convenient payment options, and automating medical billing is vital for providers looking to collect quickly from patients.
Most patients want electronic medical billing and payment collection, a recent HIMSS Analytics survey revealed. However, almost all 900 healthcare executives surveyed said their organizations rely on paper-based methods to collect from patients.
Getting price and collection information in front of patients before care delivery also facilitated faster and easier payment, the survey showed. Eighty-six percent of patients in the survey who received cost estimates said they understood their financial responsibility.
Automating medical billing and patient collections is vital to collecting revenue faster. Technologies that link providers to payers without multiple phone calls and website searchers can enable real-time cost estimates, which allow staff to engage in more meaningful patient collection discussions before medical bills turn into provider bad debt.
As healthcare evolves, revenue cycle efficiency becomes more challenging. Manual processes can no longer keep up with increasing complexity of healthcare, especially as organizations continue to grow. At the same time, patients are demanding new skills from revenue cycle leaders.
Using technology to bring the revenue cycle up to speed can help providers quickly adapt to the evolving industry.