As medical groups strive for revenue cycle optimization, it is important they benchmark and keep track of key indicators. Failing to do so can lead to a number of issues, such as high days in accounts receivable and low monthly collections.
An Ohio-based, hospital-owned medical group of more than 140 medical professionals, 500 employees and 19 specialties, which requested to remain unnamed, knows this all too well. Nearly two years ago, the group was grappling with the aforementioned issues, in addition to other revenue cycle-related problems. But the group has seen vast improvement thanks to a revenue cycle redesign by Louisville, Ky.-based consulting firm HSG.
HSG began the redesign as part of a 19-month multifaceted engagement with the Ohio group, focused on revenue cycle issues, as well as network management, practice operations and group culture. Initially, the group needed the firm's help recruiting an executive director. As the firm conducted its search for that position, a HSG consultant stepped into the executive director role on an interim basis. During that time, HSG identified a number of revenue cycle issues, says firm Director Davis Creech.
For instance, the group was understaffed at the traditionally hospital-centric central business office and historically did not keep track of many physician practice-related revenue cycle key indicators. The group also did not benchmark its performance versus medical group-specific standards and metrics. At the time, the group's days in accounts receivable was 45 days, monthly collections were $6.1 million and the net collection rate was 93.57 percent — meaning bad debt, denials and unresolved claims were running 6.34 percent.
"They basically had no [physician practice] expertise in the CBO … No one in the group had enough physician practice experience to ask the appropriate questions," Mr. Creech says. "It wasn't that the capability wasn't there. It's just that the experience of dealing with [physician practice] revenue cycle functions and [physician practice] revenue cycle issues were not there." He says the group wasn't examining key performance indicators or collections, and it also wasn't working AR and denials or completing economic/payer credentialing in a timely manner.
Neal Barker, partner at HSG, says some of these issues are not necessarily uncommon, as many of the firm's clients have gone through an accelerated growth phase with physician networks and have not invested in infrastructure to support the growth.
"It's not uncommon and it's not their fault. They never proactively planned on employing 140 providers, but once they started, it snowballed," he says. "Ultimately, the accelerated growth in numbers and scope outgrew the ability of the hospital-based functions they were using to manage practice functions such as revenue cycle. They weren't prepared, and the growth was faster than they could keep up with."
After HSG recruited a permanent executive director for the Ohio group, the COO became head of revenue cycle. The new revenue cycle head, in collaboration with HSG, spent roughly six months improving revenue cycle processes.
This improvement effort had multiple facets. The medical group now tracks many physician practice revenue cycle key performance indicators monthly, including charges, payments, in-office payment collection, adjustments, work relative value units (wRVUs), adjustments by category and contractual adjustments, just to name some. HSG said the firm changed the structure within the CBO so leaders and their teams are no longer assigned by practice, but by processes in the revenue cycle like insurance verification or coding and charge posting. "This focused the roles, responsibilities and accountability of everyone in the CBO. Everyone now had a clear understanding of what was expected of them and what their goals were," Mr. Creech added.
Additionally, the CBO developed a team that is only tasked with performing vital functions such as insurance verification, and the fee schedule was standardized throughout all practices, according to HSG. Coding and charge entry staff also started reporting to a new certified coder and auditor within the CBO.
"This allowed the team to have guidance and support, which, after the initial transition period, made all of them extremely happy. The new structure made education much easier and gave them the platform and the ability to talk daily about issues they saw. We also had the coding staff meet with the insurance follow-up team periodically to discuss issues the follow-up team saw in denials that could be improved by better coding," the firm added in a news release.
Overall, the medical practice saw positive results after the revenue cycle redesign. The group's days in accounts receivable was reduced to 36, monthly collections are $7.9 million and the net collection rate is 96.5 percent, surpassing the goal of 95.22 percent.
There are multiple lessons hospital-owned medical practices can take away from this case study. First, Mr. Creech says, is "figuring out where you are and what you are dealing with." This means having dedicated physician practice personnel to provide key revenue cycle indicators such as accounts receivable and collections. It's "something that seems simple but when [a physician network] grow[s] past 50 physicians, it's hard to get a handle on that," he says. At the Ohio medical group, it "took us a month or two to figure out what we had and the measurement of it. There was no existing dashboard."
Mr. Creech also stressed the importance of communicating to a physician network's offices and practices about what needs to be done at the front office.
"Those kind of nitty-gritty blocking and tackling procedures, it's ... work but it has to be implemented and it has to be executed," he says.