Why hospitals prioritize RCM as healthcare segues into value-based care

Hospitals' drive to cut costs has paved the way for revenue cycle management to come center stage, with organizations throughout the nation making it a top priority. Each year, the United States spends $2.7 trillion on healthcare. Of that figure, $400 billion goes toward claims processing, payments, RCM management and bad debt, a 2009 McKinley & Co. study found. Additionally, the study also found 15 cents of every U.S. healthcare dollar goes toward revenue cycle efficiencies.

At Becker's Hospital Review 5th Annual CEO + CFO Roundtable on Nov. 8, experts seasoned in the RCM process discussed how their organizations and companies are working to stay ahead of the curve.  During a panel titled, "How Does Leadership Assure Revenue Cycle Management is Effective and Efficient?," the panel emphasized why the RCM process is critical as the patient becomes increasingly responsible for their healthcare dollars.

"Our margins are getting tighter and tighter and reimbursement is getting harder," said Rhonda Anderson, senior vice president and CFO of Saint Louis-based Ascension Health. "Revenue is the first and the last touch a patient receives, so it leaves a lasting impression. We need to ensure we are providing quality services to all."

After doing a full review and working with Chicago-based Accretive Health for several years, the two organizations recently penned a contract to improve Ascension's RCM and make the process standard across the board. Ascension is the largest nonprofit U.S. health system, operating 2,500 sites of care spanning 24 states. Initially, Ascension gave each facility RCM tools, which Accretive provided, but allowed them to incorporate these tools in their own way.

"We allowed that flexibility so they could be a little unique," Ms. Anderson said. "With that lack of standardization, however, we had mixed results."

Due to these results, Accretive worked to standardize the RCM process for all Ascension's facilities. Accretive standardized the process by documenting an operating system that laid out commercial infrastructure for organizations, as well as deployed a team to audit the systems.

"With the complexity of the multiple payment models and processes across multiple care settings, people will become overwhelmed unless you give them a standard," said Joseph Flanagan, president, CEO and board member of Accretive Health.

Like many health systems around the nation, Chattanooga, Tenn.-based Erlanger Health System has had to find ways to cut costs. The health system had to get stricter on its charity care cases to ensure every patient applied and then was denied exchange coverage before the health system accepted the patient on a charity case basis.

"In the past, we were somewhat loose on what was a charity case. Today, we are requiring more and it is surprising how many people use public hospitals as their primary care provider," said J. Britton Tabor, FACHE, CPA, executive vice president, CFO and treasurer of Erlanger Health System. "We had to ask ourselves, 'how do we change the culture where the patient takes ownership of his or her health?'"

The health system employed various strategies in lieu of these changes including conversing with their physicians about coding to ensure they were getting the full amount of reimbursement, because, as Mr. Tabor explained, "there is nothing worse you can do than provide the proper care and not get reimbursed the full amount." Erlanger is also collaborating with employers to talk to their employees about their health plans, as many were selecting health plans solely on the premium charge, even if it was not the best plan design.

Going forward, patients will become more selective in their plans as they become increasingly responsible for their care. The average monthly premium for plans sold on HealthCare.gov will increase by 25 percent, on average, next year, with HHS data also showing that premium hikes will impact nearly 8.4 million Americans.

"Consumers have been thrust into the marketplace and healthcare has not transformed businesses to be consumer businesses as quickly as we should have. Healthcare organizations are facing enormous pressure to provide an Uber or Amazon-like experience," said T. Scott Law, founder and CEO of Carmel, Ind.-based Zotec Partners.

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