As healthcare systems face an onslaught of regulatory updates, increased cyber threats, and shifting payment models, leaders must stay vigilant to ensure compliance and financial stability.
In this evolving landscape, the integration of automation and AI is becoming a critical factor in determining the efficiency and competitiveness of RCM teams. Here are the key regulatory, technological, and operational hurdles impacting the healthcare revenue cycle and the strategies systems are deploying to mitigate these risks.
1. Regulatory changes. Healthcare is one of the most regulated industries, and revenue cycle teams face a litany of new policies every year. Hospitals need organized leaders to stay compliant with federal, state, and insurance company policy updates.
"The healthcare sector is subject to an increased velocity of regulatory disruptions," said Sheri Strobel, CIO of Chapters Health System in Tampa, Fla. "Changes in billing codes, reimbursement models, third-party integrations can create significant challenges for RCM teams. Failure to stay compliant can lead to fines, audits, and revenue loss."
Taniver Sahsi, MD, senior director for business operations and senior director for revenue cycle in the neurosurgery department at Mount Sinai Health System in New York City, sees a similar regulatory burden.
"Revenue cycle management teams are already challenged by a number of regulations: The No Surprises Act, price transparency mandates, and reimbursement changes to telehealth and behavioral health can all impact payment models and the revenue cycle," Dr. Sahsi said. "As, of course, can provisions in the older HITECH and HIPAA regulations that remain important to comply with or risk financial penalties."
2. Third-party breaches. Vendor partners are vulnerable to cyberattacks shutting down their systems and disrupting cashflow for their partners. The ransomware attack against Optum's Change Healthcare earlier this year affected hundreds of hospitals nationwide and disrupted payments for many of the most vulnerable systems.
"These outages not only delay billing and revenue processes, but also jeopardize patient care by interrupting the flow of essential health information," said Balaji Raman, director of financial IT at Catholic Health Services of Long Island, part of Catholic Health. "As healthcare organizations increasingly rely on digital solutions, they become prime targets for cyberattacks, which can lead to significant financial losses and compromised patient data."
Hospitals and their partners can lower the risk by prioritizing robust cybersecurity and system resilience strategies, said Mr. Raman. Health systems are also investing in tools to protect patients and revenue streams in the future.
3. Hesitancy over automation. Healthcare is lagging behind in adopting automation, especially within the revenue cycle management process, said Melissa Cohen, chief innovation and transformation officer at Cayuga Health System in Ithaca, N.Y.
"While automation technologies, such as robotic process automation and AI, have the potential to streamline billing, coding and payment processing, 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."
Workforce shortages and burnout already strain hospital administrative teams, and without automation hospitals will fall further behind with claims processing. Many hospitals are also seeing increased denials, which directly affects cash flow and financial stability.
"Addressing these automation gaps is critical to improving operational efficiency and competitiveness in a rapidly evolving healthcare landscape," said Ms. Cohen.
4. Keeping pace with payers. "The biggest threat to RCM is maintaining business agility to keep pace with payers, edits and technology," said J. Brett Tracy, vice president of revenue cycle at Arkansas Heart Hospital in Little Rock. "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."
Kevin Givelekian, executive director for digital business at Cleveland Clinic, also warned health systems that aren't able to keep up with AI adoption could fall behind the digital transformation of payers and see a higher denial rate as well as increased bad debt.
"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 those patients we serve," said Mr. Givelekian. "Payers and providers need to come together, ideally through payer interoperability networks. To transform the financial component of healthcare, which includes prior authorizations, so that the patients can get the treatment they need and deserve, and that is affordable."
The skill set gap between RCM teams with advanced automation and technology further exacerbates the difference between high and low performing organizations. Hospitals can't rely on reserves to sustain them or carry them through tough times, said Mr. Tracy.
"They must adopt radical models to ensure viability," he said.
5. Increased denials. "A concerning theme is the evolution of denials over the last five to seven years," said William Gress, RN, BSN, director of revenue cycle operations for Cottage Health. "Not only have denials increased across the board by 26%, according to Kodiak, but they have greatly increased in collection costs."
Hospitals have also seen an increase in coding and clinical denials as the workforce shifts, said Mr. Gress. The cost of a coder, nurse or physician advisor to dispute claims is higher than traditional billers, and makes it challenging for hospitals to staff teams equipped for a high volume of denials.
"This tactic increases the cost to collect and in-turn payers are increasing the cost of care," said Mr. Gress. "The only respite for physicians and facilities is future regulation in this area. Until the change occurs, continuous pressure through denials and appeals programs and managed care disputes are essential strategies in the revenue cycle."
6. Tech acceleration. Automation, AI and digital platforms for revenue cycle management have become increasingly sophisticated to support hospital RCM teams. But not everyone has access to advanced technology, widening the gap between high and low performing hospitals.
"The velocity of technical disruption is the biggest threat in health IT and RCM," said Ms. Strobel. "AI, machine learning and automation are transforming the health IT landscape. However, the challenge lies in integrating these technologies with legacy systems which can be costly and complex. Organizations that fail to adopt these technologies risk falling behind in efficiency, revenue optimization and staff burnout."
Angel Islas, finance director of the surgery department at Montefiore Health System in New York City, sees embracing innovation and identifying financial efficiencies as a huge opportunity for health systems. But they must continuously monitor back-office costs to remain effective.
"By streamlining these processes through balanced integration of human expertise and technological solutions, [hospitals] can reduce unnecessary expenditures and enhance overall efficiency," said Mr. Islas. "This approach ensures that technology handles repetitive and data-intensive tasks while human oversight maintains the quality and adaptability of operations."