Today’s hospitals are recognizing that the sophisticated processes involved in revenue management require decisions based on comprehensive business intelligence. They also recognize that effective revenue management extends far beyond the business office to the activities of payers, patients, clinicians, and pre-care and post-care employees.
What challenges do hospitals face in managing their revenue cycle? And more importantly, what can they do meet these challenges? That’s the subject of a new HFMA report, Leveraging Business Intelligence for Revenue Improvement, sponsored by McKesson Corporation.
There are many challenges to effective revenue management. The rise of consumer-directed health plans means revenue cycle management must increasingly accommodate patients covered by health savings accounts and high-deductible health plans. New payment programs such as pay for performance demand detailed information about quality of care and indicators of illness that are present when patients are admitted. And hospital margins are under growing pressure.
“In the past, hospitals did not have to be as efficient as they do now because the economics weren’t as severe,” says Lynn L. Musselwhite, assistant vice president for patient financial services at Mountain States Health Alliance in Johnson City, Tenn. “Hospitals could afford to throw people at problems. With the economics today, hospitals have to be more efficient and effective.”
The enhanced use of data and business intelligence throughout your facility can markedly improve revenue cycle efficiency. Some recommendations from the report include:
Open channels of communication with payers
Too often, hospitals do not have a clear sense of the information that payers use to determine what is actually paid on claims. Regular communication between a provider and its payers is a good starting point for addressing this problem. The Florida Health Organization, which operates four hospitals on seven campuses, holds quarterly joint operating committee meetings with representatives from each of its commercial payers.
Create realistic expectations for patients’ financial responsibility
“When we need a medical service, we should know what is going to be done and how much we will be financially responsible for prior to service delivery,” notes Bruce Adler, a partner at Atlanta-based consulting company Tatum, LLC. As much as possible, have conversations with patients about their financial responsibility before they enter the hospital. Interactive web-enabled portals can offer both preregistration services to patients and information on the hospital’s quality data and credit and collection policies. And don’t forget that you can still reach out to patients the old-fashioned way: by direct customer contact. For more tips, listen to Developing Patient Communications to Drive Revenues and Patient Satisfaction, a session from HFMA’s 2008 ANI: The Healthcare Finance Conference.
Measure revenue cycle efficiency
Identify key performance indicators that will help you identify needed improvements in your revenue cycle. Financial indicators include accounts receivable, days cash on hand, and payer performance. Measures of operational efficiency are also important. Length of stay metrics show if a hospital is getting patients out the door in a timely manner, while present-on-admission indicators can identify opportunities to improve the quality of care.
Support physicians’ improved data use
What physicians really want is better clinical information in a timely manner. By providing an efficient means for clinical results reporting, hospitals can help physicians meet this need while gathering data on factors such as length of stay and avoidable delays that will help hospital leaders gauge the efficiency of clinical processes. As hospitals move to an electronic medical record (EMR), they will also improve physicians’ ability to monitor patient status, especially when they have patients in multiple venues. For more advice on investing in EMRs, see the article Finding the ROI in EMRs by Douglas I. Thompson and Neil S. Fleming, published in the July issue of hfm magazine.
Consolidate information for the leadership team
Perhaps the most important tool you can give your senior management team is a business intelligence reporting repository for all accounts across all facilities. Such a repository must be able to slice and dice data in many different ways and deliver information fast enough for a quick executive response. Many senior leadership teams currently use systems that show what has already occurred. The next phase will employ tracking to obtain real-time data on under- and over-performing areas of the hospital so resources can be redeployed in a timely and efficient manner.
Hospital leaders are discovering that improving data use is key for optimizing revenue, developing efficiencies, and creating processes that better serve client needs. Organizations that effectively leverage business intelligence will be best positioned for success.
Ultimately, your hospital’s revenue cycle will only be as effective as your staff’s ability to perform critical tasks such as submitting clean claims to avoid denials. HFMA offers a four-hour in-depth training package that hospitals can implement themselves covering roles and responsibilities, solutions to common roadblocks, steps to submitting clean claims, an overview of the UB-04, and steps to eliminate and manage denials.
Visit HFMA's web site for more answers to pressing healthcare business questions.
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If you have questions or comments about HFMA Wants You to Know, contact editor Robert Fromberg at rfromberg@hfma.org.