How can you make the most of revenue cycle technology? Know the five keys to success in leveraging technology to boost your bottom line.
At a Glance
Healthcare providers can increase their ROI and enhance benefit sustainability by applying five keys to effectively implementing technology that supports and enhances revenue cycle processes:
- Let process improvement drive IT design decisions.
- Invest ample time in staff training.
- Communicate support for revenue cycle process changes from the top.
- Link technology requirements with business needs.
- Quantify system benefits.
The revenue cycle challenges facing today's providers, whether broken processes or limited technology, are expansive and lead to lost revenue and less cash.
Typical process challenges include inadequate preregistration activities that lead to reduced cash collected up front, billing errors, delays in charge entry and coding that result in high discharged not final billed claims, and insufficient data capture that drives denied claims and lost revenue. Frequently, these issues are coupled with overwhelmed collections staff, personnel shortages, and lack of accountability, leading to backlogs in account follow-up, less focus on denials, and the inability to effectively manage underpayments and credit balances. Limited technology, including insufficient tracking, monitoring, and reporting mechanisms for denied accounts and limited-to-no work queue functionality and productivity monitoring, further accentuates these process breakdowns.
A variety of technologies are available to address specific breakdowns in revenue cycle processes or to overcome the shortcomings of existing revenue cycle technology. But in today's capital-constrained healthcare environment, providers often have limited ability to make large investments in cutting-edge, innovative technologies.
How can you make the most of the revenue cycle technology you already have, or make the best IT purchasing decisions for your organization's bottom line? Provider experience points to five key indicators for success.
Keys to Success
Regardless of the type of revenue cycle technology selected-whether it's the replacement of an existing patient accounting system or a bolt-on tool for a temporary and less-expensive fix-providers should focus considerable attention on facilitating implementation, encouraging adoption, and sustaining system use. The following are key indicators of future implementation success.
Process improvement drives IT design decisions, minimizing go-live risk. Providers that develop conceptual and detailed process designs prior to system implementation have a greater likelihood of achieving financial and operational goals with this technology-and are more likely to sustain these benefits. The following should be considered as part of the design process:
- Use enterprise technology investment plans to create the burning platform for revenue cycle change (the "Why now?").
- Standardize processes, create cross-functional teams, and consolidate and share service options for multihospital systems to reduce the cost of implementation, ongoing management, and maintenance.
- Make the business owner for the changing function responsible for designing the new process to encourage buy-in and support sustainability.
- Identify high-priority changes that should occur prior to implementation of the new technology to minimize go-live risk and enable financial benefits.
Organization invests ample time in staff training. A common mistake organizations make during technology-enabled process redesign efforts is to underestimate the time and degree of training and human resource changes that are needed to support the technology. Providers should consider the following actions to encourage staff adoption of a new revenue cycle solution:
- Complete a detailed planning exercise that quantifies the number of staff needed based on new productivity targets to ensure adequate staffing.
- Map current employee skill sets against those required to operate the new system and determine how learning gaps can be addressed.
- Incorporate funding for training into the ROI and budget for go-live as well as ongoing training, audits, and performance monitoring.
Leadership communicates support for revenue cycle process changes. Hospital executives who demonstrate visible support for changing revenue cycle processes and frequently communicate the vision, status, and expected benefits of a new solution can dramatically enhance its potential for success. The project team can also help to sustain positive momentum and keep the initiative top-of-mind among executives and other stakeholders by regularly sharing metrics, providing regular updates at leadership meetings, and continually demonstrating resulting improvements in practical ways.
The organization links technology requirements with business needs. Successful revenue cycle technology initiatives are frequently spearheaded by a functional revenue cycle owner partnered with an IT professional who understands the needs of the business and then helps to create an IT solution that will best serve those needs. These project team members can smooth the path to solution implementation and adoption if they seek IT department involvement early in a project (ideally, at the conceptual design and pre-system selection phases), minimize system customization options, and document all change order decisions.
The solution is subject to ongoing performance evaluation. Accurate estimates of potential benefits, a clear plan for tracking and measuring progress against clear milestones, and a metrics dashboard for ongoing performance evaluation are critical to a revenue cycle technology project's success. Many bolt-on tools have strong management reports and data engines that can jumpstart the process. In addition, revenue cycle business owners, IT staff, and hospital leadership should:
- Develop a clear vision and set appropriate expectations
- Gain broad agreement on metrics, targets, and approaches for quantifying system benefits
- Standardize calculations and carefully document fields used for the calculations, source of data, and assumptions
- Ensure linkage to financial statements
- Communicate and post targets broadly
Where to Start
Selecting the right path for technology-enabled revenue cycle change is not an easy decision. IT spending trends indicate that about 21 percent of providers are considering replacing their existing patient accounting system to better manage revenue cycle challenges, according to Gartner Dataquest 2005. Once an organization determines that a new patient accounting system is required to achieve bottom-line improvement, the next consideration is how long it will take to implement. Typically, the time frame is 12 to 18 months or more, which includes time for process changes, staff training, and technical design.
However, most organizations cannot afford to wait this long to solve their revenue cycle challenges and will turn instead to an interim solution. These solutions are commonly referred to as bolt-on tools, because they are outside the core transactional systems.
Bolt-on tools vary in complexity, platform, and usability. They typically are:
- Lower-cost technology solutions that are often deployed to address specific process breakdowns
- Designed to drive workflow and process standardization.
- Applications that rely on a host system for processing (bill production or account balances are maintained in the host system)
- Owned and controlled by a functional department rather than IT
- Deployed within three to six months, at a lower cost and in a shorter time frame than redesigning existing technology.
These short-term tools will allow providers to leverage new and existing technology to positively impact the bottom line. The steps outlined in the exhibit below reflect the typical path that providers take to determine deployment of an interim revenue cycle technology solution.
View Exhibit 1
The technology solution decision tree reflects the path that providers can take in determining whether to deploy an interim revenue cycle solution.
Tools Available to Quickly Achieve Benefit
Providers can deploy short- to medium-term, interim revenue cycle solutions either to address specific process breakdowns or to overcome existing technology shortcomings. For example, a hospital that is experiencing large-scale, front-end-related denials may need to invest in an enterprisewide scheduling and/or replacement patient accounting system for long-term success; however, the associated benefits of such a robust system can take as long as 36 months to achieve. Bolt-on tools may provide benefits more quickly, allowing the hospital to build and implement future-state processes prior to the new system implementation. Providers can use bolt-on tools to achieve financial benefits and overcome legacy system deficiencies in the following two areas of the revenue cycle in particular.
Patient access financial clearance. Preregistration and insurance verification worklists help to make sure that high-dollar services are appropriately prioritized and cleared prior to service. These tools support multiple processes, including front-end registration and verification, financial counseling work flow, and productivity and management reporting, to help ensure complete and accurate collection of demographic, insurance, and financial information prior to service.
Denials management. Denials management tools can be used to create an inventory, prioritize accounts, resolve denied claims, and accumulate trends for payer negotiations. These tools support work flow and management reporting, including denial rates by reason and service center, unworked inventories, and payment status on previously worked claims.
Buy or Build?
An important decision is whether to develop the bolt-on solution internally or to purchase it "off the shelf." Key factors include cost drivers, process benefits, implementation risks, impact on users, timing, and flexibility/functionality. Other considerations include project complexity, speed of implementation, and the robustness of the tool required to address the multiple process breakdowns.
Internal development often requires extensive IT department and process owner availability to develop, creates challenges related to implementation timing, and results in ongoing maintenance costs and ownership responsibilities. Alternatively, external solutions (which are available from consulting firms, clearinghouses, and software vendors) usually require little to no development by internal staff and shorter implementation time frames (six to eight weeks).
Many providers have recently gone through a bolt-on growth path, starting with a simple spreadsheet and, over time, enhancing bolt-on functionality and upgrading capabilities to SQL or Oracle databases and web solutions. The complexity of tools required depends on functional needs and how rapidly management desires to improve a process and deliver measurable results.
View Exhibit 2
Benefits of Technology-Enabled Process Change
Seventy-six percent of hospital CEOs who responded to the 2005 Future of Health Care Survey said they consider an IT project's overall impact on the organization to be one of the most important factors in evaluating its ROI. The three options for achieving enterprisewide financial benefits from an interim revenue cycle solution are quick wins, standardization, and revenue optimization.
View Exhibit 3
In a recent survey, hospital CEOs said they consider an IT project's overall impact on the organization to be an important factor in evaluating its ROI. The exhibit at right compares the potential for enterprise-wide financial benefits from three interim revenue cycle solutions: quick wins, standardization, and revenue optimization.
Quick wins. Quick-win solutions are characterized by relatively low mplementation time (less than six to eight weeks) and low dependence on existing IT systems. Quick wins offer a highly focused functional impact with minimal operational disruption.
Providers that might seek quick wins include those needing a rapid infusion of cash, a reduction in bad debt or in the cost to collect (turnaround situations), or a rapid demonstration of change, either as a standardized effort or in combination with other longer-duration initiatives.
There are several types of quick wins:
- Skip tracing. Vendor or bolt-on tool to check demographics for all/some of self-pay and high-dollar patient liability claims
- Chargemaster diagnostic. Bolt-on diagnostic tool to identify outdated codes and under-used codes
- A/R management. Bolt-on tool to generate work queues for prioritizing claims and tracking and reporting status, metrics, and performance at the account follow-up representative level
- Point-of-service cash. Bolt-on tool to support quantification and communication of patient liability as well as work queue and tracking monitoring functionality
- Workflow efficiency and optimization. Bolt-on tool that tracks productivity and actions taken by each user and provides detailed reports on productivity by user, team, or department to identify training needs and support performance improvement
Standardization. Standardization options are characterized by moderate implementation time (eight to 16 weeks). As with quick wins, standardization options rely on bolt-on tools for added technology functionality. In contrast to quick wins, however, these options require focused process redesign to maximize the technology benefits and frequently require changes in the interactions, communications, and data flow among departments or functions.
Providers that might use standardization options include those needing to standardize core processes across multiple locations, those that want to implement leading-practice processes in select areas prior to a full-scale system go-live, those with weak legacy systems or limited visibility from poor reporting, or those with Sarbanes-Oxley control concerns.
Seven standardization options and their associated benefits are:
- Electronic eligibility and benefit verification. Vendor or bolt-on tool to check select scheduled visits (inpatient or outpatient) to confirm insurance information, benefits, and authorization requirements
- Billing scrubber. Rules-based tool to identify errors in claims prior to billing
- Financial clearance. Dedicated financial clearance unit supported by a bolt-on tool with work queue and rules-based functionality to help ensure complete and accurate collection of demographic, insurance, and financial information prior to service
- Local medical review policy/advance beneficiary notice. Tools to identify potential noncovered services and to identify when an ABN should be provided to the patient
- Denials management. Dedicated denials management supported by a bolt-on tool that provides work queues, routing, and reporting
- Management reporting and metrics. Bolt-on tool to generate metric dashboards and management reports to increase process and productivity visibility
- A/R outsourcing. Outsource component of outstanding A/R, either one-time or ongoing, based on claim age. Outsourcing tools will provide reports on denials, payer issues, collection rates, etc.
Revenue optimization. Revenue enhancement options are characterized by higher implementation time (greater than 16 weeks) due primarily to the reliance on IT and other organizational systems. These options tend to be more strategic, involve fundamental changes in functions, and have a broader functional impact.
Organizations that might consider revenue enhancement options include those that want to achieve leading-edge performance, those at or near benchmark performance, or those considering implementation of multiple core systems (e.g., customer information system, patient accounting system, and enterprise resource planning). Additionally, these organizations frequently have several bolt-ons already in place, as well as patient accounting systems that are relatively strong, but may have specific modules that need to be refined.
Five revenue enhancement options and associated benefits are:
- Centralized scheduling. A centralized scheduling call center supported by customer relationship management and scheduling technology
- Contract management. A bolt-on or wraparound tool that supports identification of potential underpayments and helps prioritize through work queue and reporting functionality
- Integrated revenue cycle, supply chain, and customer information systems. Integration to allow linkages between clinical quality and outcomes data, supply acquisition costs, and supply utilization and charge and reimbursement information
- Data warehousing. New or enhanced data warehouse to allow comprehensive data analysis, trending, and metric development
- Financial counseling. Bolt-on tool with work queue, management reporting to prioritize counseling needs and track outcomes
Finding the Right Solution
Healthcare providers can increase their ROI and enhance benefit sustainability through the implementation of technology-enabled revenue cycle processes. Today's capital-constrained environment can make implementing an expensive, long-term patient accounting system impractical. However, organizations that need to quickly generate revenue and cash or to reduce bad debt can employ interim, bolt-on tools that will allow them to leverage new and existing technology to improve revenue cycle processes and positively impact the bottom line. By applying the five key performance indicators for success in implementing revenue cycle technologies, providers can facilitate implementation, encourage adoption, enhance their revenue cycle processes-and boost their bottom lines.
Courtney Hoagland is a principal, Deloitte Consulting, LLP, Chicago (firstname.lastname@example.org).
Neville Zar is a senior manager, Deloitte Consulting, LLP, Boston (email@example.com).
Heather Nelson is a senior consultant, Deloitte Consulting, LLP, Chicago (firstname.lastname@example.org).
Publication Date: Thursday, February 01, 2007