Why are healthcare organizations of many different types and sizes dealing with similar financial challenges?
From claim delays and denials, to increased scheduling without increased revenue, many of those providers seem to have one thing in common: they lack an ongoing focus on Revenue Cycle optimization.
Let’s look closer at common issues that impact the Revenue Cycle. Then let’s explore how today’s Revenue Cycle Analytics can help providers aim higher, with fresh insights about trouble spots – leading to corrective actions for ongoing financial health.
Why is Revenue Cycle optimization important to healthcare providers?
Revenue Cycle Management (RCM) looks at the various day-to-day components of the Revenue Cycle and how chronic but unseen inefficiencies may be negatively affecting the organization’s financial picture. The goal of Revenue Cycle optimization is to get all the pieces working smoothly, both individually and together.
Typically, the Revenue Cycle components include:
- Patient registration
- Insurance verification
- Clinical documentation
- Medical coding
- Billing and claim submission
- Payment collection
- Denials and appeals
Every provider, of course, is different. Larger organizations like hospitals have multiple departments that may not be communicating or coordinating effectively. Smaller organizations may have employees performing additional functions in which they may not be experts.
The impact of Revenue Cycle issues on financial performance
Let’s look at just a few examples of what a robust effort in Revenue Cycle Management might uncover:
- Typically, about 80% of payments are made within 30 days. Much of the rest of that potential income may be written off due to the expense of collection or the lack of expertise to properly collect. Many smaller or rural facilities lack the expertise in the entire RCM cycle causing a lower percentage of collections within 30 days and causing an overall lower collection due to the delay.
- Patient registration employees lacking proper training to ask the patient about any changes to their insurance or improperly entering the insurance information into the EHR, may lead to payment delays and denials.
- Inconsistent coding and claims, or those that fall outside of CMS guidelines, can lead to time-consuming audits, financial penalties and increased future claim scrutiny.
- Efficient processes to secure authorizations can cause claims to be denied, creating heavy manual and sometimes unsuccessful attempts to collect.
- Lack of technical expertise or support for the workflow within the EHR can cause both financial and operational bottlenecks.
There are many more examples, and any given organization is likely to have more than one undiscovered issue. The total cost of those inefficiencies, of course, adds up over time.
After a health system starts getting serious about Revenue Cycle optimization, the dollars from increased income and decreased waste can be put toward additional services, staff and physicians, training, updated equipment, building new facilities and general profitability.
Many providers don’t think of setting financial or other benchmarks to aim for, so there’s less to work with in assessing current performance, or positive or negative trends. Key Performance Indicators (KPIs) of high-performing organizations typically include:
- Average daily charges
- Average number of days for outstanding payments
- Clean claim rate
- DNFB Level (discharged not final billed)
- Year-end net collections and adjusted collections
- Number of Days accounts not touched”?
There are others, but overall, optimized and prompt collections are the goal. And although competing considerations are common, the effort forces managers to look closer at their own practice.
Standard benchmarks are published by the Healthcare Financial Management Association (HFMA). But naturally, all expectations that that you set should be realistic for your organization.
Are you ready to speak with an RCM professional who can support you in identifying the cause of your challenges? Send us a message, and we’ll schedule an introductory call.
What is ‘Revenue Cycle Analytics’?
With the increasing complexity of patient care and organizational operations, Excel spreadsheets are no longer adequate for documenting, manipulating and understanding the ongoing flood of Revenue Cycle data.
What is the role of data analytics in revenue management? Unlike a single analysist assigned to one department, data analytics makes a more comprehensive assessment of the entire Revenue Cycle, quickly spotting gaps, bottlenecks and other potential for chronic inefficiencies.
By removing ‘insider bias’ from the picture, the clear numbers are more likely to counter the defense, “but that’s how we’ve always done things.” Often, the cloud of the current process makes it difficult to see the real problem.
How can an organization improve its Revenue Cycle Management using data analytics?
By combining information about admissions, cash collections, accounts receivable, past performance and trending, reimbursement rates, claim denials and more, Revenue Cycle Management can be improved. The system drills down and detects anomalies when the numbers don’t match; for example, when charges are up, but collections are down.
With a high level of flexibility in slicing the data, Revenue Cycle Analytics also reveals various types of trends (after a 3- or 6-month period of gathering data and establishing base levels). Whether there’s a slow or quick change to a data point, analytics can help pinpoint the reason.
This often leads to further investigation within the health system. For example, a single employee regularly cutting corners in areas such as registration or authorization or a physician improperly submitting clinical documentation might not understand the wider impact or financial implications for the hospital.
How else can Revenue Cycle Analytics be used?
- Predictive analysis for more accurate financial forecasting and better decision making
- Identifying chronic errors in medical documentation, coding and billing
- Fraud detection and prevention by ensuring that insurance information is valid and consistent
- Identifying needs for patient financial counseling when there are payment problems
For a higher level of operational efficiency, RCM analytics data can also be integrated with an organization’s other information systems, such as general ledger or clearing house data, electronic medical records and time-keeping systems.
Artificial Intelligence (AI) will likely grow to become a larger factor in RCM analytics. Currently, AI is used for tasks like checking the status of claims via the portals provided by major payors. This has proved far more efficient than waiting for a status reply from payors. However, until AI improves in this and other aspects of RCM, it’s still up to humans to verify its work.
What hidden issues are continuing to cost your organization money?
The fact is, even Chief Financial Officers (CFOs) of hospitals or organizational leaders ‘don’t know what they don’t know’ about day-to-day wasteful inefficiencies, or even how to look for them, until they learn the value of Revenue Cycle optimization. Data analytics provides even more powerful real-time insights – that can be understood at a higher level rather than deep in the details. Once analytics provide the high-level identification, the ability to drill into details of the problem is a key function of RCM analytics.
Learn how JTS Health Partners uses data analytics to improve Revenue Cycle Management
Depending on your needs and priorities, a number of flexible analytical options are available to improve your Revenue Cycle. For most, we can apply Revenue Cycle Analytics to your entire organization, or just to one area, such as coding or collections.
With outsource engagements of one to three years, JTS becomes your RCM department. You’ll not only receive insightful reports, but also helpful, expert guidance for making specific improvements.
Analytics as a Service (AaaS)
With this subscription-based service, nCREAS™, we monitor levels and provide dynamic, real time reports to help focus your in-house RCM efforts. A truly helpful option for cash optimization, denials management and more. nCREAS can also provide automated quality auditing as well as team member goal attainment and cash contribution.
With consulting engagements of 60-90 days, the RCM experts at JTS assess the provider’s policies, processes, workflows and software, then make recommendations for meaningful and sustainable improvements. The depth of our expertise is our differentiator.
Interim or Permanent Hires
Looking to add a Revenue Cycle Director or Manager to your internal team? We’ll find appropriate professionals for your review and help arrange interim or permanent placement.
Ready to find out more about transforming your RCM Organization?
While you may be familiar only with your own organization, the RCM experts at JTS have seen what works, and what doesn’t, at a wide variety of healthcare facilities. After putting our expertise to work, hospital leaders typically find noticeable and sustainable improvements in their financial picture, while presiding over a smoother-running operation.
Chances are, you have questions, such as how your numbers and levels compare to similar organizations. Once we start digging in, you’ll have those answers, as well as guidance for ongoing improvement.
It begins with a conversation.
Schedule a no-cost, no-obligation initial consultation with a JTS Health Partners professional. We’ll discuss your needs, questions and concerns, as well as the most cost-efficient ways we can help.