Health system and ambulatory service mergers and acquisitions continue to make the news as organization leaders seek to achieve the operational, service and supply chain benefits afforded by the formation of a new, consolidated business.
This desire to achieve greater scale and lower costs often leads the newly-created companies to consider consolidation, or wholesale outsourcing, of redundant revenue cycle management (RCM) services or the creation of a single billing office to meet the demands created by the larger, more complex business entity.
Among the drivers of these changes are the shift toward value-based care and the continuing pressure exerted by healthcare consumerism. These reasons, among others, force organizations to find new ways to own larger pieces of healthcare services, which, in turn, allows them to administer and accept new payment models and bring customers a complete healthcare experience. But bringing these ideas to fruition is a difficult and time-consuming endeavor, especially when it comes to managing the new company’s revenue cycle.
While the motives behind the mergers and acquisitions are sound, it often leads to significant RCM difficulties, which can jeopardize financial health. Disparate systems, teams, and processes often are brought together. Or the attempt is made and then scrapped as the C-suite, IT, and Finance Departments discover there’s no simple, quick and cost-effective way to join the solutions and personnel in a way that makes organizational, technological, or fiscal sense.
Organizational Pressure Creates Opportunity
As greater pressure for mergers is exerted on institutional and ambulatory healthcare businesses, the intrinsic challenges in operating RCM solutions will continue to grow and become a serious issue. The difficulty makes itself known when:
• both companies face technological or organizational challenges while attempting to join the solutions or processes;
• staff lack the specialized expertise required to “join” the different solutions or processes; and the
• revenue cycle of the new organization continues to grow in complexity with the addition of new inpatient and outpatient services.
While it may seem counter-intuitive to discontinue use of RCM solutions or processes that “worked” as separate systems, this is an example of a time when less is definitely more. A strategic partnership with a single RCM service provider can improve efficiencies, staff experience, and financial outcomes.
A recent survey of executives who work in stand-alone and multi-hospital health systems supports this assertion. Nearly 70 percent of hospitals that use more than one RCM vendor say having multiple RCM systems from multiple vendors causes the institution to experience more denied claims, according to Understanding Health Systems’ Revenue Cycle Management and Challenges, a HIMSS RCM Survey published in 2018. Denials were the most significant problem among any within the RCM process with 76 percent of hospitals saying it is their biggest challenge. And the more RCM vendors, the more problems with denied claims.
No doubt there will be start-up and training costs when committing to a single RCM partner, but it’s apparent there will be financial gains, as well. There will be a time and monetary commitment, as well as the need for a well-thought-out strategic implementation plan. The ability, however, of all internal stakeholders to use a single RCM solution or process will increase efficiency, decrease the amount of time needed to submit claims, decrease errors, and, ultimately, save money in the long run. All of which translates to fewer hours and dollars needed to manage the entire RCM process each day.
The In-source, Outsource Conundrum
Once the decision is made to implement the RCM solution or process, and have it managed by a single partner—making the single billing office strategy reality—additional discussion is necessary. Important choices must be made. The RCM solution is generally executed in one of three ways:
• Implemented internally (SaaS configuration);
• Outsourced completely (BPaaS configuration); or a
• Hybrid approach.
Every organization operates with its own tolerance for risk, existing expertise in billing, varying levels of in-house technology proficiency, and differing budget allocations, all of which must be taken into account prior to making a final decision. A close examination of these areas and others will help make the decision to utilize one methodology over another straightforward.
Addressing these internal questions and developing a transition plan will assist in making the conversion relatively stress-free.
Those Who Make the Transition, Those Who Don’t
As long as there are external pressures—and efficiencies and savings to be had—healthcare market consolidations will continue. The ability to recognize the advantages of a single RCM solution partner (and the disadvantages and risks of attempting to use an existing multi-partner relationship) helps ensure the transition will be successful.
Organizations that fail to make this transition early in the organizational integration face a number of difficult questions and ongoing business concerns. Some healthcare providers may not survive in their current form, but, rather, become a candidate for future acquisition at a substantially discounted rate. Others will find themselves stumbling forward, slowly learning that they must adapt their business model or consolidate with a larger player that has the means to augment or restructure revenue cycle business processes.
Getting in front of the financial and process changes that are part of a new business operation is one way to ensure a productive transition from two groups into a single, high-performing organization.
Allen Latham is vice president of revenue cycle management at TriZetto Provider Solutions, a Cognizant Company.