The hospital revenue cycle has become increasingly complex in recent years for several reasons, including the adoption of advanced payment models and the rise of self-pay accounts. To navigate this challenge and maintain a stable financial position, many hospitals and physician practices are automating billing and payment functions.
Below is an overview of key points that emerged from a recent study that provides insight on financial automation in healthcare, and why hospitals and physician practices are eliminating manual revenue cycle processes.
Healthcare shifting away from manual transactions
1. Effectively managing a hospital's revenue cycle requires the completion of time-consuming tasks that are prone to human error. However, automation can help streamline a significant amount of this labor-intensive work.
2. In an increasingly complex payment environment, healthcare leaders are seeing the benefits of automating billing and payment functions, and the industry is beginning to shift away from manual administrative transactions, according to a report from the Council for Affordable Quality Healthcare published in January. The report tracked the adoption of HIPAA-required and other electronic transactions between healthcare providers and health plans and benchmarked how healthcare is progressing toward reducing administrative complexity.
3. CAQH tracked the adoption of claims-related business transactions, such as insurance verification, claim submission and preauthorization, and found that while total transactions in the healthcare industry increased 18 percent over the past year, the volume of manual transactions fell 1 percent for providers and 6 percent for health plans.
Inefficiencies persist
4. The findings from the CAQH report revealed that the healthcare industry is making progress in transitioning away from manual transactions, but it also showed there's still a lot more work to be done.
5. Automating prior authorizations is one major area of opportunity for healthcare providers. The medical industry's adoption of electronic prior authorization transactions continues to lag other transactions in the administrative workflow, with more than half of prior authorizations conducted manually, according to CAQH.
The ROI of automation
6. Hospitals and other provider organizations exploring whether to invest in software to automate revenue cycle functions are using a variety of metrics to assess the ROI of automation. The CAQH report makes a strong case for automation by highlighting the potential savings it offers.
7. Healthcare providers could save as much as $14.64 per patient encounter by using a fully electronic workflow. CAQH said the greatest per-transaction savings opportunities for providers are claim status inquiry, prior authorization, and eligibility and benefit verification.
8. According to CAQH, the medical industry could save $9.8 billion a year by fully automating the following six functions: eligibility and benefit verification, prior authorization, claim submission, claim status inquiry, claim payment and remittance advice.
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