The revenue cycle is a complex system that offers hospitals several opportunities for creating efficiencies and cost-savings. However, many organizations forgo improving the revenue cycle and instead focus primarily on cost cutting. Three experts from Revenue Cycle Solutions, LLC — Bill Poole, principal, Dan Thiry, managing principal and Mike Evans, COO — explain the importance of improving a hospital's revenue cycle and give some tips on how to take advantage of cost-saving opportunities.
A complicated process
"There are tremendous opportunities that I think have been not paid as much attention to because there is so much focus on the expense side," Mr. Poole says. Mr. Evans, a former hospital CEO, says most hospitals focus only on lowering expenses to save costs because it is an area that the hospital can control and that will show an immediate impact. Mr. Evans says neglecting revenue cycle performance may prevent a hospital from reaching additional efficiencies and strong financials. "As a former CEO, I can tell you from past experience, you can't solely cost-cut your way to success," Mr. Evans says. Spending time on revenue cycle should not replace a focus on expenses, however. "Don't take the focus [on expenses] away, because it's critically important. But the revenue side needs equal attention," Mr. Poole says.
In contrast to cutting expenses, the revenue cycle is a complex system with different pieces that must be coordinated to achieve savings. "This is a very large and intricate system that's constantly running," Mr. Poole says. He says an efficient revenue cycle requires three elements: people, process and technology. For example, the facility needs an appropriate amount of staff and training for staff to ensure each part of the revenue cycle is working efficiently. Secondly, hospitals need to create a process for improving revenue cycle performance. This process should come from assessments, which Revenue Cycle Solutions recommends occur yearly. "A process needs to be defined and in place first with technology supporting it," Mr. Thiry says.
Integrating Technology
Because the revenue cycle involves many different people and departments, one challenge to using technology is ensuring the systems are integrated. Mr. Thiry says on average, hospitals use 10-12 different technological systems throughout the entire revenue cycle. Sophisticated software may not benefit a hospital if there are different systems that are not integrated. Hospitals should assess their technology to identify deficiencies and areas of overlap, according to Mr. Thiry. "One of the biggest mistakes many providers make is purchasing too many pieces of software instead of looking for one robust solution," he says.
The Revenue Cycle
1. Preregistration. The revenue cycle begins when the patient is scheduled. "Right here out of the gate is where we see things go wrong," Mr. Poole says. Mr. Thiry says two keys to improving scheduling and preregistering are the timeliness of information captured and the quality of that information. For example, he suggests hospitals schedule as many patients in advance to "better manage the entire intake process." Timeliness should not affect the quality of information, however. If there is a rush during registration, there is the possibility of capturing incorrect information that may result in a denied claim, Mr. Poole says.
"There is a significant opportunity here to improve patient service and patient satisfaction on the front end of the process as well," Mr. Thiry says. "Too often, hospitals might associate this upfront effort [of] collecting co-pays and deductibles in advance of the patient visit as cumbersome and maybe an intrusion, but when it's done correctly, it's very welcome."
2. Tracking services. The second step in the revenue cycle is tracking the services a patient receives. Hospitals should ensure the charges associated with these services and the associated codes are accurate and posted to the patient's account as quickly as possible.
3. Coding. Coding is essential to the revenue cycle because it impacts the potential payment from payors. This process will be a challenge in the next few years as hospitals transition their clinical coding methodology from ICD-9 to ICD-10. Hospitals should invest in training and update technology to maintain proficiency in this area.
4. Billing. Hospitals' billing services often present opportunities to increase efficiencies in the time delay between discharging a patient and sending a bill to payors. Mr. Thiry says Revenue Cycle Solutions finds hospitals usually hold onto bills two to three times longer than they should.
5. Collection. Collection of payments from the insurance company and patients is also an area that may be inefficient due to the different number of people and systems involved. Mr. Thiry suggests follow-up collection efforts. "It's certainly something successful hospitals stay on top of and monitor on a daily basis," he says. In addition to following up on collections, hospitals should have ongoing assessments and auditing of charts, according to Mr. Evans. He suggests looking at a sample of charts each quarter to ensure payments reflect terms of contracts with payors. "It is important to know [managed care contracts] back to front, because there are hidden opportunities." For example, the contract may include supplemental payments for implant devices.
Every hospital has a fiduciary responsibility to ensure that its revenue cycle is capturing the appropriate reimbursement for all clinical services rendered, Mr. Evans says. "Annual assessments of the revenue cycle are the best way to guarantee that revenue capture receives as much attention as expense reduction in any hospital's quest to improve its bottom line."
Learn more about Revenue Cycle Solutions.
Related Articles on Revenue Cycle:
Reducing Hospital Revenue Leakage: Linking Your Hospital's Item Master and Chargemaster
10 Recent Survey Findings About ICD-10
Improving Revenue Cycle Can Yield Big Savings for Hospitals
A complicated process
"There are tremendous opportunities that I think have been not paid as much attention to because there is so much focus on the expense side," Mr. Poole says. Mr. Evans, a former hospital CEO, says most hospitals focus only on lowering expenses to save costs because it is an area that the hospital can control and that will show an immediate impact. Mr. Evans says neglecting revenue cycle performance may prevent a hospital from reaching additional efficiencies and strong financials. "As a former CEO, I can tell you from past experience, you can't solely cost-cut your way to success," Mr. Evans says. Spending time on revenue cycle should not replace a focus on expenses, however. "Don't take the focus [on expenses] away, because it's critically important. But the revenue side needs equal attention," Mr. Poole says.
In contrast to cutting expenses, the revenue cycle is a complex system with different pieces that must be coordinated to achieve savings. "This is a very large and intricate system that's constantly running," Mr. Poole says. He says an efficient revenue cycle requires three elements: people, process and technology. For example, the facility needs an appropriate amount of staff and training for staff to ensure each part of the revenue cycle is working efficiently. Secondly, hospitals need to create a process for improving revenue cycle performance. This process should come from assessments, which Revenue Cycle Solutions recommends occur yearly. "A process needs to be defined and in place first with technology supporting it," Mr. Thiry says.
Integrating Technology
Because the revenue cycle involves many different people and departments, one challenge to using technology is ensuring the systems are integrated. Mr. Thiry says on average, hospitals use 10-12 different technological systems throughout the entire revenue cycle. Sophisticated software may not benefit a hospital if there are different systems that are not integrated. Hospitals should assess their technology to identify deficiencies and areas of overlap, according to Mr. Thiry. "One of the biggest mistakes many providers make is purchasing too many pieces of software instead of looking for one robust solution," he says.
The Revenue Cycle
1. Preregistration. The revenue cycle begins when the patient is scheduled. "Right here out of the gate is where we see things go wrong," Mr. Poole says. Mr. Thiry says two keys to improving scheduling and preregistering are the timeliness of information captured and the quality of that information. For example, he suggests hospitals schedule as many patients in advance to "better manage the entire intake process." Timeliness should not affect the quality of information, however. If there is a rush during registration, there is the possibility of capturing incorrect information that may result in a denied claim, Mr. Poole says.
"There is a significant opportunity here to improve patient service and patient satisfaction on the front end of the process as well," Mr. Thiry says. "Too often, hospitals might associate this upfront effort [of] collecting co-pays and deductibles in advance of the patient visit as cumbersome and maybe an intrusion, but when it's done correctly, it's very welcome."
2. Tracking services. The second step in the revenue cycle is tracking the services a patient receives. Hospitals should ensure the charges associated with these services and the associated codes are accurate and posted to the patient's account as quickly as possible.
3. Coding. Coding is essential to the revenue cycle because it impacts the potential payment from payors. This process will be a challenge in the next few years as hospitals transition their clinical coding methodology from ICD-9 to ICD-10. Hospitals should invest in training and update technology to maintain proficiency in this area.
4. Billing. Hospitals' billing services often present opportunities to increase efficiencies in the time delay between discharging a patient and sending a bill to payors. Mr. Thiry says Revenue Cycle Solutions finds hospitals usually hold onto bills two to three times longer than they should.
5. Collection. Collection of payments from the insurance company and patients is also an area that may be inefficient due to the different number of people and systems involved. Mr. Thiry suggests follow-up collection efforts. "It's certainly something successful hospitals stay on top of and monitor on a daily basis," he says. In addition to following up on collections, hospitals should have ongoing assessments and auditing of charts, according to Mr. Evans. He suggests looking at a sample of charts each quarter to ensure payments reflect terms of contracts with payors. "It is important to know [managed care contracts] back to front, because there are hidden opportunities." For example, the contract may include supplemental payments for implant devices.
Every hospital has a fiduciary responsibility to ensure that its revenue cycle is capturing the appropriate reimbursement for all clinical services rendered, Mr. Evans says. "Annual assessments of the revenue cycle are the best way to guarantee that revenue capture receives as much attention as expense reduction in any hospital's quest to improve its bottom line."
Learn more about Revenue Cycle Solutions.
Related Articles on Revenue Cycle:
Reducing Hospital Revenue Leakage: Linking Your Hospital's Item Master and Chargemaster
10 Recent Survey Findings About ICD-10
Improving Revenue Cycle Can Yield Big Savings for Hospitals