Shrinking margins keep hospital finance administrators up at night, though many could sleep easier by addressing the big issue that leads to lost money: revenue cycle inefficiency.
In a 2014 evaluation of healthcare providers, Modern Healthcare found that 61.3 percent saw their profit margins decrease from the previous year. Poor hospital revenue cycle management often contributes to such losses. McKinsey & Company reports revenue cycle inefficiencies consume 15 cents of every healthcare dollar. In real numbers, that's $400 billion of the $2.7 trillion in nationwide annual healthcare spending.
Administrators know that every missed revenue opportunity can further shrink an already razor-thin profit margin, and many try to stem losses by purchasing spot solutions, bringing in consultants or shipping some tasks off to third-party outsourcers.
Despite their good intentions, these short-term stop gaps only address parts of the problem and can actually further bog things down. They also don't target the four root causes of inefficiency: complex information handoffs, frequent manual involvement in automated processes, workflow misalignment and the use of different information systems across the organization.
By understanding how each of these four factors affect revenue operations, healthcare providers can bring in better technology and operational solutions to recoup losses and grow profit margins.
Inefficiencies in Revenue Operations
Like a doctor examining a patient's symptoms, hospital administrators need to determine if these four inefficiencies plague their finance departments:
Complex Records Transfers
Think about how many times a patient's health or financial record passes from one department to another. From initial record creation, to the first examination, to an inter-departmental referral, to final billing, these transfers don't always run smoothly. As a result, hospitals don't always know that a record is complete and accurate. How can they be sure that the final bill reflects all the services that patient actually received? Perhaps they're leaving money on the table.
Manual Interventions
Hospitals often bring in software to automate certain financial tasks, but many facilities don't achieve the full benefits of automation. Whether it's because of a software shortcoming, bad IT integration, a lack of staff training or slow employee uptake, many finance staffers end up using manual workarounds to ensure the department still runs smoothly. Now you're paying for a tool that offers minimal benefits while still facing the risks of human error and lost productivity.
Misaligned Workflows
Without alignment between finance workflow and changes in technology and regulations, staffers have to alter how they work to compensate. For example, an administrator may avoid using a new IT system because it doesn't quite fit into "the way things are done." Or, a staffer may have to manually report on compliance adherence in a spreadsheet because an IT tool isn't updated to reflect the latest regulations. Working out of sync can lead to noncompliance, poor workflow transparency and a culture of inefficiency that ultimately impacts the bottom line.
Disparate Information Systems
Most departments use their own software for clinical and financial management. And, over time, IT might tweak each system to staffers' specific needs. Let's say a patient's record needs to pass through Radiology, Lab and Pharmacy. Each department's information system must send data to central billing to create claims, but highly customized and over-configured software could create reporting inconsistencies and errors. Imperfect claims can lead to insurance disputes, dropped transactions and costly exceptions, all of which squeeze hospital revenue.
Integration, Automation, Alignment Improve Workflow
While healthcare provider organizations can plug in software to address each of these problems individually, oftentimes revenue leakage remains an issue because of system disparities. It's more productive and efficient to enhance the systems and controls you already have in place with a holistic, end-to-end audit and reconciliation approach. The ultimate goal should be to achieve an integrated, automated and aligned workflow.
Better integration leads to smoother communication and data transfer between different systems and departments. So, when a patient receives an X-ray, blood work and prescription in one visit, the Radiology, Lab and Pharmacy departments automatically pass all data, using consistent terms and codes, to a central billing system. This eliminates manual handovers, which ensures important information isn't lost or misplaced, and improves end-to-end data tracking to minimize compliance risks. And most importantly, it ensures accurate patient billing, enabling hospitals to protect their bottom line.
An automated auditing and balancing system reduces errors and saves time by taking redundant work off a staffer's plate and initiating corrective actions. Whether it's flagging missing information, clarifying patient data or automatically transferring data from one system to another, automation allows organizations to focus on tasks that actually require human attention.
Finally, it's important to reconsider existing workflows to account for new software or regulations. Technology can help – some software lets you easily address new regulations through built-in features, for example. By getting in the habit of re-visiting finance workflow, providers are better able to maximize IT investments and meet compliance goals.
Working Smarter Unlocks Hidden Revenue
Rising costs and a complex regulatory environment may continue to pressure hospital finances, but a healthy bottom line can be preserved by unblocking access to revenue. From technology misalignment or misuse, to complex or patchwork processes, inefficiencies can obscure or obstruct sources of hidden revenue. The key to finding financial breathing room is addressing the root problems that plague most revenue departments but that are routinely ignored or minimally addressed. With the right systems in place and better oversight of the entire revenue workflow process, those notoriously thin profit margins may seem far less restrictive.
Brendan English is VP line of business, content, for ASG Software Solutions, where he is responsible for global oversight over the strategic and tactical direction of ASG's Information and Content Management solutions. He has more than 30 years of experience leading the sales, technical, business development and marketing components of software solutions for healthcare, banking, financial services and insurance industries, combining information integrity, records management, business intelligence and compliance.
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