Revenue Cycle

Bill Henciak
Christine Fontaine
Keith Fields
Stacy Parks

At a Glance

Based on its experience with implementing a virtual central business office, UMMS recommends the following steps to ensure the success of such an initiative:

  • Define the process flow for the organization's day-to-day revenue cycle operations prior to implementation. Then select best practices and milestones for managing accounts.
  • Identify any possible technology issues that could arise during implementation prior to go live.
  • Hold a midproject debriefing with staff.
  • Develop an organizational chart that details who is responsible for handling issues that arise during implementation and afterward.

In FY08, the University of Maryland Medical System (UMMS), based in Baltimore, faced a significant revenue cycle challenge. The health system had four central business offices that served its seven hospitals-and each central business office operated differently. The definition of a denial, for example, varied by central business office, and revenue cycle workflow processes and data standards were unique to each location.

Ultimately, the lack of standardized central business office procedures affected health system revenue. Although performance at each location was generally solid, UMMS's leaders understood that by automating certain processes, standardizing others, and sharing data that could point to trends in denials or delayed claims and identify area workflow process inefficiencies, the organization could improve on that performance. Targeted improvements included reducing days in accounts receivable to fewer than the current 77 days, increasing cash collections, and decreasing the amount of revenue lost to denials and bad debt.

Because each of UMMS's central business offices had best-of-breed patient accounting systems, the health system's leaders knew they did not want to completely revamp the systems used by these offices. Instead, they decided to implement software that could tie these disparate systems together, automate specific revenue cycle functions across the system, and collect data from each central business office that could lead to revenue cycle improvements for the organization as a whole.

This initiative generated dramatic improvements in revenue for the system and enhanced staff productivity and patient satisfaction. By FY09, results included:

  • A $155 million increase in cash collections
  • A reduction in A/R days to 66 days
  • A decrease in bad debt of about $710,000-$12.7 million below the FY09 target
  • An increase in revenue of more than $82 million

Taking a Closer Look

In 2008, leaders from each of UMMS's four central business offices attended a series of meetings designed to shed light on the revenue cycle processes and workflows undertaken by these offices. Because no corporate revenue management infrastructure existed within UMMS, revenue management processes were entity-specific: Each central business office worked within its own silo.

Although each of the offices recorded solid revenue performance, some of the disparities in reporting, electronic processing, and imaging among the central business offices were troubling for UMMS's executives. For example, not all of the central business offices had electronic insurance verification, and none were able to check the status of claims electronically. Automated worklisting and follow-up was available at just two of the central business offices. Imaging capabilities for front-end documentation, explanations of benefits, and correspondence did not exist at two of the facilities. Performance measurement and data standards also varied significantly-and UMMS's leaderswere concerned that some accounts were being written off by employees inappropriately to remove these accounts from their worklists.

A team of revenue cycle professionals from each of the central business offices was created to look for opportunities to standardize revenue cycle processes and workflows among the central business offices, consistently measure performance, and improve productivity-all of which was expected to produce increased revenue for the health system. But standardizing reporting of revenue cycle data across the organization presented a challenge for UMMS. Each of the central business offices used different patient accounting systems. How could UMMS make these disparate systems speak the same language without investing in new patient accounting systems for each facility-a move that would be costly and disruptive, and that was deemed unnecessary, given the best-of-breed accounting systems operated by each office?

The team chose an enterprise workflow and reporting tool that would collect data from the disparate systems and allow for a standard approach to reporting, analyzing, and communicating these data to key stakeholders across the organization. Essentially, this tool enabled UMMS's central business offices to speak the same language with respect to data collection and reporting, creating a "virtual central business office" for the organization. All "pockets" of information related to a patient's account would be tied together, from insurance and coverage information to information related to referrals, the physicians who cared for the patient, and the departments from which the patient received care or service.

The tool also would provide UMMS with extensive drill-down capabilities, enabling the organization to:

  • Identify bottlenecks and other problem areas within its revenue cycle
  • Measure the effectiveness of changes to workflow processes that were implemented based on analyses of the data received
  • Enforce best practices for revenue cycle workflows and processes across the organization
  • Increase its bargaining power with payers

UMMS's team also decided that the organization should invest in imaging capabilities for each of its central business offices. Doing so would help to eliminate the use of paper throughout each step of the revenue cycle, automate and standardize cash posting, and increase efficiencies in following up on patient accounts.

Steps Toward Change

To identify best practices for revenue cycle processes, the revenue cycle team compared procedures at each facility in order to ascertain which processes were the most effective and efficient. For example, one of UMMS's central business offices excelled in processes for denials management, while another had optimal processes for managing discharged-not-final-billed claims. The collective review of each office's procedures required all team members to be open-minded about the potential for change within their departments-and to be cheerleaders for change in communicating any adjustments in workflow processes to staff in their offices.

The team also assessed the organization's readiness for a project of this magnitude. They asked the following questions, for example:

  • Do we have the right people in place to implement the new technology and processes required?
  • Are we able to dedicate a project manager to this initiative on either a full-time or part-time basis?
  • How much time can we reasonably expect to dedicate to this project without negatively impacting performance?
  • Do we have access to the necessary operational knowledge (such as IT and operational expertise) to implement a system such as this?
  • Is there a system administrator within our organization who will "own" the system as it is being implemented and going forward?
  • Have we considered any future technologies that may be needed (such as new clinical systems/registration systems, upgrades to patient accounting systems)?
  • How will these needs be affected by the revenue cycle technology we choose today?
  • Will the addition of a new hospital to our system or the need for increased imaging/retention/storage capabilities be affected by the choices we make today?

Based on discussions during the team's weekly meetings, UMMS's leaders decided to hire a full-time project manager to oversee implementation of the health system's virtual central business office technology and the standardization in workflow processes and data reporting across the system. The project manager would also serve as a "traffic cop" among the central business offices when disagreements about the way in which processes should be standardized or key definitions (such as the definition for a claim) arose. A system administrator also was identified who would manage the virtual central business office system and oversee its implementation and use.

UMMS's revenue cycle team selected a vendor for the project after viewing demonstrations of various systems that could help meet UMMS's revenue cycle needs. The technology they selected required a one-time investment of $1.5 million, and additional costs, including:

  • Software for the system
  • Investment in network upgrades, imaging solutions, and interface development
  • Implementation support
  • Project management

The team also identified areas of potential savings that could result from implementation of the new revenue cycle technology, such as reduced outsourcing costs; decreased costs related to document storage, retention, and retrieval; and decreased supply costs resulting from the switch to a paperless system.

Staff at each facility were trained on use of the new system and the best-practice revenue cycle processes they would be expected to follow. Then, UMMS began a staged implementation process, beginning with Shore Health System in Easton, Md. A staged implementation would allow UMMS to apply the lessons learned in its first live implementation to its other facilities as the rollout continued.

Increased Efficiency-and Revenue

UMMS's virtual central business office and the standardization of revenue cycle workflows and procedures throughout the system ultimately shifted the focus of the central business offices from denials management to denials prevention.

The rollout took a year and a half to complete, with each facility's implementation lasting three to five months. With implementation complete, UMMS's virtual central business office enables revenue cycle staff to increase their first-pass yield rates by minimizing errors that would result in rework. The system's visual-of-work queues, which can be seen by staff as well as managers, focus employees' work on the accounts that require their attention, enhancing opportunities to maximize cash collections.

The drill-down capability of UMMS's virtual central business office system enables managers to quickly identify and respond appropriately to trends that are impeding workflow. Employee productivity reports, which are generated daily and monthly, provide managers with data related to the number of accounts worked per employee, the number of accounts completed, the average time per account by employee, and more. These reports help managers to recognize the achievements of high-performing staff and discuss areas of concern with employees whose numbers are lower than desired.

See Exhibit


The increased revenue that resulted from the initiative quickly surpassed the $1.5 million in start-up costs for the project. The system recorded an increase in revenue of more than $82 million from FY08 to FY09. Cash collections, which increased by $155 million from FY08 to FY09, exceeded UMMS's cash collections goal for FY09 by $76 million. Bad debt transfers were $12.7 million lower than UMMS's target goal for FY09, with bad debt decreasing by about $710,000 over FY08 figures.

Based on its experience, UMMS recommends the following steps to organizations considering a similar initiative.

Define the process flow for the organization's day-to-day revenue cycle operations prior to implementation. UMMS believes that additional time spent learning about the revenue cycle processes at each of its central business offices prior to standardizing processes would have enabled a smoother transition for staff and the system as a whole. Once processes have been reviewed in depth, the organization should work with revenue cycle staff to select best practices and develop an ideal set of milestones for working accounts.

Identify any possible technology issues that could arise during implementation prior to go live. For example, UMMS did not realize that the health system's bandwidth was not large enough to support the virtual central business office program until the program went live at Shore Health System-and operated very slowly, causing much frustration for staff. UMMS's IT department worked quickly to fix the issue.

Hold a midproject debriefing with staff, rather than just a go-live debriefing after implementation. Doing so can allow an organization to better pinpoint potential problems prior to go-live by taking the time to address staff concerns, and it provides an opportunity to celebrate the staff's work to date. Senior leaders should be kept apprised of the project's status, too, as their support is crucial to the project's success.

Develop an organizational chart that details who is responsible for handling issues that arise during implementation and afterward. Protocols should be established regarding how staff should contact the appropriate team members when specific issues arise.

Hold weekly meetings prior to implementation not only with revenue cycle staff, but also with IT. Such meetings will ensure that the organization's IT staff understand the scope of the project and are prepared to support it. Weekly calls with the software vendor to ensure that the project is on schedule also are recommended.

Bill Henciak is director, patient financial services, Baltimore Washington Medical Center, Baltimore, and a member of HFMA's Maryland Chapter.

Christine Fontaine, CHFP, is director, revenue cycle operations, Shore Health System, Annapolis, Md., and a member of HFMA's Maryland Chapter.

Keith Fields is administrator, revenue cycle services, Maryland General Hospital, Baltimore, and a member of HFMA's Maryland Chapter.

Stacy Parks is senior director of patient financial services, University of Maryland Medical Center, James Lawrence Kernan Hospital, and University Specialty Hospital, Lutherville, Md., and a member of HFMA's Maryland Chapter.

For more information, contact Erin Taylor Miskelly, revenue cycle senior manager, University of Maryland Medical System (


Publication Date: Tuesday, June 01, 2010

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