Healthcare CFOs have not had an easy year. The cost of care continues to climb while revenue falls. The numbers aren’t pretty: since 2020, staffing costs jumped 26.6% while hospital margins in 2022 have closed in the negative1 for the first 4 months (and have yet to be positive). Operating margins have decreased by 56-78% year-over-year. Claim denials are skyrocketing, up 23% since 20162. The stats just keep coming—and so does the financial pressure.
To solve these challenges, financial leaders look to automate key processes and be as efficient as possible. Revenue cycle management (RCM) technology partners and solutions capitalize on today’s rapidly expanding data to enable innovation and drive business impact. Most tools do a few things well, taking a best-of-breed approach to address front-end, mid-cycle, and back-end use cases. They can be great at streamlining and automating their piece of the puzzle, but struggle to address the overall revenue ecosystem.
The result: many healthcare organizations now have an average of 25-40 technology providers dedicated solely to various parts of the revenue cycle. This isn’t just complex and siloed, it’s detrimental to the business. Research shows when organizations use more than one solution, denials are a larger issue. In addition, there is universal agreement that collecting data across disparate sources is a challenge.
This potpourri of tools works in a hub-and-spoke model with IT at the center and point products at the periphery. It puts a significant burden on IT, which is already struggling with digital transformation across its infrastructure. Integrations are limited and inconsistent. Functionality is duplicative, as each solution expands beyond its core capability to add additional features that overlap with other vendors’ offerings. Maintenance and implementation costs are also climbing, and those dozens of agreements get expensive (and unreasonable) quickly. Every tool claims to solve more problems, better, but instead adds another silo to an expensive, fragmented stack.
The situation is untenable. We call it the revenue “cycle” because money flows through a set of processes over and over. But this cycle, like a carousel with 50 horses, only goes in circles and isn’t effective. Healthcare revenue doesn’t need a cycle. It needs a platform for effective revenue management.
A unified approach: How to rethink revenue management
Rethinking revenue management starts with paring back and prioritizing. What capabilities are nice-to-haves vs. essentials? Where are multiple tools performing the same tasks?
Which functionality needs to be integrated into what other systems? What manual processes can be automated? Where can emerging technology, like AI and machine learning, make work more efficient and accurate?
By identifying the most important capabilities, you can see where your current stack overlaps and evaluate which solutions meet your critical requirements. In a survey we recently conducted, healthcare finance leaders flagged deep integrations with EHR, other RCM products, and the patient portal as “must haves,” along with pre-built analytics and the ability to create custom dashboards and reports. Any tool that can’t meet these “must have” requirements should be carefully evaluated in your revenue management platform.
The prioritization process should enable revenue management teams to reduce their RCM toolset to five or ten vendors—or even, in an ideal world, just one. This dramatic simplification isn’t as far-fetched as it sounds. Healthcare organizations know the current model is broken, and technology providers are racing to fix it. In fact, 28% of healthcare3 CFOs plan investments in single-vendor RCM platforms in the next 12 months.
Centralizing revenue management offers many benefits. Instead of having to pull dozens of different levers across multiple systems, teams can “set it and forget it" and visualize yield and performance in one place. It’s less distracting, more efficient, and allows for far fewer opportunities for human and technology error. Not to mention, it’s simpler on IT, finance, patient access, procurement, and users alike.
A core revenue management platform consolidates all data in one place for exponentially stronger analyses. A longitudinal data set—that cross-checks discrete RCM pieces—opens the door to a better understanding of what’s happening, where, how, and most importantly, what can be done to improve.
A dedicated end-to-end revenue management platform also improves the patient experience. Today’s patients expect a cohesive digital experience. For instance, 79% of patients3 want estimates of their healthcare costs and 56% demand modern digital payment options. By unifying the front-, middle-, and back-end processes, patients enjoy a much more holistic experience that drives satisfaction and loyalty.
Finally, when healthcare organizations no longer have to juggle a slew of disparate tools, they can focus on what matters: patient care. A unified revenue management platform not only improves the financial health of an organization, but the health of its community.
Healthcare organizations can’t afford to continue riding the carousel of revenue cycle management. Instead, it’s time to rethink revenue management with a cohesive platform that empowers organizations to move the needle on profitability.
--
Jonathan Wiik has over 25 years of healthcare experience in acute care, health IT and insurance settings. He started his career as a hospital transporter and served in clinical operations, patient access, billing, case management and many other roles at a large not-for-profit acute care hospital and prominent commercial payer before serving as Chief Revenue Officer.
In his current role as Principal of Healthcare Strategy at FinThrive, he is responsible for support and consultation on business development opportunities. Wiik works closely with the market and hospitals on industry best practices for revenue cycle management. He is considered an expert in the industry for healthcare finance, legislation, revenue cycle management and strategic transformation.
Wiik is an active advocate of legislative changes that evolve the healthcare industry. He’s the author of Healthcare Revolution: The Patient Is the New Payer, and Revenue Evolution: Helping Providers Get Paid in An Era of Uncertainty, which was released in early 2020. He frequently speaks as a thought leader at state and national events.
Wiik is the President of Colorado HFMA, and previously served as a board member for the American College of Healthcare Executives (ACHE) and Colorado Association of Healthcare Executives (CAHE). He holds a bachelor’s degree in sports medicine and holds two master’s degrees in healthcare administration and business.
References:
1. https://www.kaufmanhall.com/sites/default/files/2022-05/KH-NHFR-05-2022-May.pdf
2. https://www.hfma.org/topics/news/2021/07/healthcare-news-of-note--national-index-shows-denials-are-up-11.html
3. Proprietary third-party survey data performed for FinThrive