Hospital revenue cycle management has been a testing ground for automation and artificial intelligence in healthcare.
Many organizations identified strong potential for a more efficient revenue cycle process boosted by technology, especially as margins tightened in the last few years and the administrative burden to process claims soared. But is everyone excited about the digital transformation?
Melissa Cohen, chief innovation and transformation officer at Ithaca, N.Y.-based Cayuga Health System is. She would like to see the industry accelerate automation adoption in the revenue cycle.
"While automation technologies, such as robotic process automation and AI have the potential to streamline billing, coding and payment processes, many organizations need to be faster to embrace these solutions," she said. "The reluctance to adopt automation leads to inefficiencies, higher labor costs and increased risk of human error. In an environment where workforce shortages and burnout are already straining resources, the lack of automation can result in significant delays in claims processing and collections, directly impacting cash flow and financial stability."
Ebrahim Barkoudah, MD, system chief and regional CMO at Springfield, Mass.-based Baystate Health told Becker's many health systems rely on outdated technology and have struggled with data integration and interoperability, which leads to billing errors and claims denials.
"The rapidly evolving healthcare landscape demands that organizations swiftly adapt to new policies and regulations to prevent compliance issues and potential revenue losses," Dr. Barkoudah said. "Moreover, the sector faces significant human resource challenges, such as staffing shortages that hinder effective revenue cycle management."
Health systems are leveraging technology to streamline operations and reduce administrative burden on staff as an innovative approach solution. But the organization requires an acute modernization strategy to reap the benefits without taking on extra risk with cyberattacks.
"Transitioning to advanced platforms that offer improved data integration and accuracy can significantly reduce billing errors and enhance financial outcomes," said Dr. Barkoudah. "Regular training in data security and compliance is crucial for RCM employees to understand cyberattack vectors and adhere to regulations like HIPAA. Economic pressures further strain the system with rising costs and financial instability compelling organizations to reduce expenses while maintaining a robust accounts receivable process."
But as with any new technology, there are risks. AI can have hallucinations and may miss nuances in some processes. The technology also risks cyberattacks and downtime due to internal or third party outages, which hampers cash flow. Hundreds of hospitals across the U.S. suffered after Change Healthcare took systems offline due to a ransomware attack and had to dip into cash reserves.
St. Louis-based Ascension also reported a hit to the revenue cycle after a cyberattack in May affected IT operations. The health system reported revenue losses from the attack and days cash on hand dropped from 211 last year to 194 by the end of the 2024 fiscal year June 30. The health system also reported net days in accounts receivable jumped from 46.7 days last year to 78.4 days this year.
Insurers are also leveraging AI in for claims processing and approval, which may lead to more denials.
"The complexities of revenue cycle management continue to grow, particularly as payers increasingly deploy bots and automated systems to deny claims," said Wayne Gillis, CEO of Great Falls (Mont.) Hospital. "This trend creates additional challenges, making it more difficult to secure the reimbursements we are owed. To counter this, we need to explore how AI, particularly large language models, can be leveraged to make a significant impact."
By implementing large language models and AI into the revenue cycle process, Mr. Gillis sees the potential for the technology to raise the level of precision with claims processing, identify patterns and proactively address issues before they become problematic, to improve financial outcomes.
Carol Yarbrough, business operations manager at the telehealth resource center for UCSF Health System, told Becker's relying too much on automation for claim approvals or denials can have a negative impact on the organization.
"Look at various commercial payers denying claims based on 'usual' dates of admission and causing real harm to patients hows admissions may not be paid in a timely fashion or delaying treatment based on reliance on AI algorithms," said Ms. Yarbrough.
Keith Givelekian also sees AI and generative AI widening the gap between high and low performing hospitals, which could threaten access to care. Hospitals without the ability to become more efficient with revenue cycle technology will fall further behind in the future.
"In my opinion, the biggest threat in health IT and RCM right now is that as AI/GenAI continues to mature, healthcare institutions, that have low margins, will be unable to keep pace with payers, which will result in higher denial rates and bad debt increasing," Mr. Givelakian told Becker's. "If that comes to fruition, healthcare institutions will have less revenue to invest in innovation within the clinical practices, which ultimately is a major detriment to the patients we serve."
Best case scenario, payers and providers collaborate through interoperable networks to transform care and better manage prior authorizations, Mr. Givelakian said. J. Brett Tracy, vice president of revenue cycle at Arkansas Heart Hospital, has similar concerns.
"The biggest threat to RCM is maintaining business agility to keep pace with payers, edits and technology," Mr. Tracy said. "The influx of automation, generative AI and RPA is rapidly accelerating the gap between high and low performing organizations. High performing organizations are prioritizing efficiency through automation and increasing levels of output and analytics to advance financial performance."
There is a widening gap between the skills, knowledge and insights to glean from data analytics on financial performance, and all the right data won't help turn those insights into action items. Hospitals need savvy leaders who can optimize the technology for smoother operations and a growing bottom line.
"No longer can organizations rely upon reserves to sustain or carry them through," said Mr. Tracy. "They must adopt radical models to ensure viability."