Hospitals could bring in more revenue if they choose to focus on revenue cycle performance over costs. In fact, some hospitals are even showing a concerning flat performance in revenue cycle management. According to best practices firm Advisory Board, various health systems and hospitals are missing out on a huge opportunity to increase revenue due to lagging revenue cycle performance. In fact, an average hospital with 350 beds has overlooked an opportunity to earn as much as $22 million in revenue capture, according to the firm’s analysis. What seems to be the problem? According to National Partner for Consulting at Advisory Board James Green, a number of critical benchmarks have been continuously sliding or have remained stagnant since 2011. Because of this, Green believes that there is now a need for “strategic overhaul.” That also means meeting the four key challenges that face revenue cycle performance today.
Commercial Payers Are Subjecting Claims to Closer Scrutiny
First, commercial payers are scrutinizing all of the claims more closely, which leads to a significant number of denials. Because of this, providers would have less money that can be used to offset the reduced reimbursements from both Medicaid and Medicare payouts. In fact, the Advisory Board has found that hospitals are now losing as much as five percentage points of their margins on average due to claim denials, suboptimal contracts with payers and underpayments.
Patient Obligations Negating Increased Coverage Benefits
Patient obligations are also neutralizing the benefits of increased coverage. That’s because there are now an increasing number of high-deductible health plans becoming available in the market. Not to mention, there is also a significant increase in bad debt. In fact, a survey conducted by the Kaiser Family Foundation showed that the percentage of U.S. workers that have deductibles greater than $2,000 grew from five percent to a whopping 19 percent from 2008 to 2015. Moreover, the Advisory Board analysis also showed that the portion of obligations that patients are writing off as bad debt rose from 0.9 percent to 4.4 percent. Unfortunately, this trend is expected to continue. To address this growing issue, there is a need for both hospitals and health systems to improve their patients’ financial experience by being as transparent as possible with price estimates. There should also be convenient access provided for both payment and scheduling so that the patient can experience a positive care encounter.
Increased Performance Burdens for Medical Groups and Physicians from MACRA
Aside from this, the Medicare and Chip Reauthorization Act (MACRA) has imposed significant new financial penalties for poor quality and cost performance as well as insufficient reporting. This means there is greater complexity and financial risk and that is expected to drive more physicians to seek hospital employment and leave small group practices. MACRA has also increased the need for precise risk adjustment documentation, which is also required by the Medicare Risk Adjustment Factor, the score that would determine the financial target bonuses and penalties for health care providers. Because of this, hospitals must immediately put an infrastructure in place to document performance standards and to mitigate the chances of risking their revenues.
Hospitals Are Not Properly Practicing Consolidation
Too often, a significant number of hospitals stop the integration of their revenue cycle organizations at the creation of a joint centralized business office. Oftentimes, they also fail to seek any further economies of scale. What is needed here is a more holistic integration. Ideally, the integration should involve a value-added shared service organization that can provide a common business intelligence platform throughout all entities and service lines system-wide. This way, there would be an ability to streamline the process and develop only one patient bill for all physician and hospital services. Increase your hospital’s effectiveness in realizing better revenue capture by improving your revenue management cycle performance. Don’t miss out on what is revenue cycle management and how it poses great opportunities for your company. In a world where the landscape of healthcare is changing, you need to be able to capitalize on every revenue potential that is available to you. Sources Average Hospital Revenue Cycle Leaves $22 Million on the Table, prnewswire.com 4 revenue cycle management challenges for hospitals, fiercehealthcare.com