When health systems acquire physician practices, they should take steps to align the practices’ revenue cycles with those of their hospitals to ensure patients have a consistent financial experience across their entire care delivery systems.
Hospitals, health systems, and medical groups have increasingly moved toward employed physician models in recent years due to many factors, including downward pressure on traditional fee-for-service payment and rising incentives for coordinated care across the continuum. Although reports vary regarding specifics, in a 2015 report on physician compensation, Medscape reported that 63 percent of physicians were employed. a And Merritt Hawkins, a large physician recruitment firm, reported physician employment by hospitals at 64 percent in 2014, up from just 11 percent in 2004. b Individual physicians often find benefits to employment, especially in work-life balance. c However, physician employment and the associated increase in top-line revenue do not guarantee a healthy bottom line, and in many instances, employing physicians has a negative impact on a health system’s finances due to increased expenses and other factors. d
In addition to expense growth, expanding physician employment and acquisition of existing practices can create or expose multiple revenue cycle challenges, including process gaps and breakdowns between clinics, varying levels of staff and management knowledge and skills, and inconsistent reporting across clinics and physicians. Also, although there are nuances among specialties, it is important that all specialties be brought together with consistent processes and consistent metrics, where feasible. Such an approach not only makes for more efficient operations but also is paramount to creating a consistent patient experience. Health systems should work closely with their physician groups to streamline revenue cycle functions to create a seamless patient experience, accelerate cash collections, and minimize revenue gaps to support long-term growth and sustainability of their overall organizations.
The experiences of Benefis Health System in Great Falls, Mont., provide a case example of how health systems can successfully meet these challenges.
Benefis Health System Revenue Cycle Improvement Initiative
Benefis is an integrated health system with 530 licensed beds that partners with more than 250 providers and operates more than 20 primary care, specialty, and urgent care clinics. Benefis has continued to grow, both in its number of employed physicians and in the number of patients it served in a broad geographic and regional community. To support the growth of the organization, the health system’s leadership identified an opportunity to create consistency between the hospital and physician revenue cycles, and standardize processes where feasible, to improve efficiencies, and improve both patient experience and physician engagement.
Benefis had just completed an extensive hospital revenue cycle design and improvement project, which its leaders deemed to be successful. To build on this success, Benefis wanted to expand the focused efforts to also include the medical group’s revenue-cycle-related functions and services.
The expanded efforts were focused on increasing coordination across clinic and hospital revenue-cycle-related functions and services, including enhancing clinic staff training, implementing traditional “back-end” improvements tailored for the physician revenue cycle, and standardizing reporting and accountability structures for physician revenue cycle performance. A multifaceted and comprehensive approach to the physician revenue cycle allowed Benefis to realize gains in multiple performance metrics, including increased point-of-service and back-end cash collections, reduced accounts receivable (A/R) days, and reduced write-offs. Performance improvement in these key areas helped the health system maintain strong financial health while continuing to pursue rapid physician growth.
An Interdisciplinary Approach
Benefis was determined to take an interdisciplinary approach to the physician revenue cycle initiative. To oversee necessary changes and timely progress for the initiative, Benefis created a governance structure that would include leaders from both hospital and physician administration. An executive steering committee was established under the leadership of the presidents of acute care services and of the medical group, with additional representation including the health system’s CFO, CIO, and system director of revenue cycle, and the medical group’s COO and director of finance. The steering committee met monthly (and more often, as needed) to review progress, discuss next steps, and identify project risks. The group was charged with improving organizational communication, removing barriers, and promoting the success of initiatives across the health system.
C-level or director leads were assigned to individual initiatives to oversee progress on a day-to-day basis.
Role of practice managers. Before Benefis embarked on the physician revenue cycle initiative, the health system had been experiencing rapid growth and acquisitions of established practices, which resulted in inconsistent involvement in revenue cycle functions among its physician practice managers. Throughout the improvement effort, lines of communication were opened between revenue cycle and practice leaders to improve understanding and collaboration between the groups. Practice managers were given access to actionable data—including write-offs, unbilled, and individual RVU detail (such as E&M codes versus procedures)—and provided with education and training to better enable them to contribute to revenue cycle improvements. Collaboration between revenue cycle and practice leadership at the steering committee level was key to establishing consistent priorities and expectations.
Areas of focus. The interdisciplinary collaboration between health system revenue cycle leaders and medical group practice leaders included focused on managing denials and avoidable write-offs and on bill holds and claim edits. Traditionally, these functions often were viewed as “back-end” functions, with limited involvement from the clinics, where many of the problems had their root causes. To address process gaps resulting from this disconnect, Benefis created a denial-management task force consisting of revenue cycle and clinical stakeholders to share information and collaborate on solutions.
Benefis implemented a means for reporting on denials and write-offs that provided trending by root cause, clinic, physician, and payer. The reporting algorithms considered process and operational complexities, such as the role of available technology in improving the process, along with the potential level of impact from the improvement. The reports themselves were designed to contain specific, meaningful, and relevant data that would inform process improvement efforts. This reporting allowed the group to identify issues with the largest financial impact to the organization and focus efforts on resolving root issues, whether related to intake and registration processes, physician documentation, coding, billing, payer errors, or other areas along the revenue cycle continuum. For example, if a specific write-off indicated the largest net loss to the organization, the group would make this issue a high-priority point of focus.
To address bill holds and claim edits, revenue cycle managers attended bimonthly practice management meetings to provide education and updates based on data trends. Workgroups were also created to develop best-practice processes to reduce existing bill holds and prevent future issues. Practice managers served as primary liaisons with both front-desk staff and physicians for both these initiatives.
Another focus area for improving practice management performance was evaluating charge capture processes. The importance of timely charge capture often is overlooked in practice operations, where the financial impact of delays may not be apparent to managers or physicians. To address this issue, practice managers, physicians, coders, revenue cycle leaders, and IT staff worked together to create detailed reporting with charge lag information by clinic and individual physician. In addition to helping identify outliers and prioritize focus areas, the team was also able to tailor solutions to address specific challenges.
Once root-cause issues were identified, those issues were prioritized and individual analyses were performed that were tailored specifically to finding a resolution for each issue. The analyses often included consideration of the systems used, reporting needs, training and coaching, and workflow redesign.
For example, one root-cause issue identified was that some physicians were simply late in completing documentation. Practice managers worked with these physicians to improve timeliness, escalating to health system administrators and the president of the medical group as necessary.
As another example, in one specialty clinic, a paper process was identified as the root cause of significant delays. The team addressed this issue by developing a workflow within the electronic health record (EHR) to streamline communication between physicians and coders, greatly reducing the time between patient service and charge capture.
Physician onboarding. Extensive planning and strong interdepartmental communication is key when bringing a newly acquired physician practice under the umbrella of a health system. Minor breakdowns associated with physician onboarding and health plan enrollment can have a significant impact on downstream revenue cycle processes. For example, if a physician begins to provide services before revenue cycle processes are fully in place, claims must be held, resulting in unbilled A/R and putting payment at risk. Meanwhile, administrative delays that prevent physicians from starting their practices can erode physician and patient satisfaction, as well as the health system’s revenue.
Health plan enrollment. Physician revenue cycle processes also can be adversely affected by delays in health plan enrollment. Benefis sought to improve the health plan enrollment process by using a multifaceted approach focused on reducing enrollment timeframes, improving communication across all stakeholder departments, and getting physicians more engaged in the process. Responsibility for this effort was assigned to a workgroup consisting of staff and leaders involved in physician recruiting, contracting, privileging, health plan enrollment, onboarding, IT, revenue cycle, and performance improvement. This group created a detailed map of the existing process to assist with understanding where redundant tasks, communication breakdowns, and unnecessary delays occurred.
As it identified opportunities, the group mapped out a future-state process and created checklists for key stakeholders. The interdisciplinary approach to addressing existing barriers was important to identify and implement the best solutions for all Benefis stakeholders.
The Patient Experience
Benefis has a strong organizational commitment to ensuring its patients have a consistent experience in accessing its care delivery system, regardless of the entry point or EHR installed at a given location. A key focus of the physician revenue cycle improvement initiative, therefore, was on implementing consistent processes across all physician clinics. To ensure each patient would have a consistently positive experience, while also maintaining positive revenue cycle outcomes, Benefis conducted extensive training for all clinic registration staff comparable to the training provided to hospital registrars but tailored for each clinic’s EHR.
Key competencies addressed in this training included customer-service techniques; proper registration processes; and steps required to meet Medicare requirements, verify insurance coverage, and validate benefits. The staff also were educated on the most common registration-related claim edits, and on how to inform patients up-front on their financial liabilities (a process discussed in greater detail below). All staff were required to pass skills assessments on the covered material.
Point-of-Service Financial Conversations With Patients
As part of its strategy to fulfill a critical role as the primary provider of health care for its community and the surrounding large regional area, Benefis places special emphasis on its relationship with patients. To strengthen that relationship, Benefis established a comprehensive approach for assisting patients with managing their financial liabilities, in which the priorities were service and communication with patients. Benefis acknowledged that although some patients may not be accustomed to having financial conversations prior to or at the time of service, the alternative of receiving a bill several weeks after a visit for an unexpected amount could be a highly negative and dissatisfying experience. Benefis’ program focused on providing extensive training for clinic staff and management, up-front patient education on expected liabilities, and financial assistance options for patients in need.
Clinic staff and managers were educated on how to identify every form of patient liability, including copayments, deductibles, coinsurance, and out-of-pocket maximums. They were trained on how to inform patients of financial assistance policies and to identify appropriate resources, with scripts provided for patient conversations. Clinic staff also was trained to provide basic education on patients’ benefits and contact information for a patient benefit adviser who could assist with more complicated questions.
The patient benefit adviser plays a key role in assisting patients in need and creates consistency in Benefis’ approach to providing financial assistance. Uninsured and underinsured patients are referred to the adviser to discuss alternative options, which include extended payment plans, discounted or free care through the financial assistance program, or enrollment in insurance coverage through the federal health insurance exchange. This valuable resource is an important factor to maintain and increase the focus on patient service and community relationships for the health system.
Another key focus for the education is on estimating patient financial responsibilities. Benefis implemented department-specific, user-friendly tools to assist staff with the creation of conservative estimates for patient out-of-pocket amounts.
Coding Approaches for the Physician Revenue Cycle
Health systems that operate a network of physician clinics must develop a coding strategy that meets the needs of providers as well as revenue cycle management. When acquiring physician practices, it is important to be mindful of the existing relationships between coders and providers who will become hospital employees, while also maintaining high standards for consistency and quality. Health systems may choose to centralize coding under revenue cycle management, or use a decentralized approach, which places coders in or assigned to individual clinics. Key considerations regarding whether to use a centralized versus a decentralized approach are listed in the exhibit below.
Centralized Versus Decentralized Coding: Advantages and Disadvantages
Benefis Health System developed a hybrid model, in which coders are primarily centralized in a space within the medical office building. This approach allows coders to maintain close relationships, facilitates live interaction opportunities with assigned physicians, and allows coding management to maintain effective oversight.
Physician Revenue Cycle Billing and Collections
Health systems traditionally have focused on revenue cycle improvements for hospital operations, where relatively small improvements can have an immediate and large financial impact. The physician revenue cycle presents unique challenges because of high visit volumes where each visit has a relatively small cash impact.
In a central business office where hospital and physician operations are managed under the same umbrella, it is important for hospital and physician staff to have similar expectations based on the unique characteristics of their patient account populations. Indeed, establishing such similar expectations was one of the primary goals of the physician revenue cycle improvement initiative.
With this goal in mind, the health system’s business office leadership developed training and expectation documentation and skills assessments for billing and follow-up staff, tailored to the physician revenue cycle. Productivity expectations and reporting also were created to assist management in holding staff accountable for the quantity of work performed.
In addition, the business office leadership implemented account-level quality reviews, scorecards, and feedback mechanisms focused on continuous support and improvement. And the health system’s IT department was able to identify and prioritize system fixes and enhancements to improve workflow for staff and reporting for management. One such improvement that Benefis found to be very helpful was moving procedure coding for orthopedic surgery from a paper process to an electronic process.
Benefis also understood that, to serve patients best and provide a consistent experience across the health system, it needed to provide patients with a single point of contact for questions about their statements. To this end, Benefis centralized this function for both hospital and physician accounts to create a seamless systemwide experience for patients.
Enhanced Reporting for the Revenue Cycle, Clinics, and Physicians
With any improvement initiative, measuring and reporting key metrics is essential for providing stakeholders and executives with real time data on successes and opportunities. For managers and interdisciplinary task force members, information should provide insight that allows for follow-up action, as discussed previously. The information also should promote accountability for staff as well as leadership.
Benefis developed summary and detail reporting across multiple areas of the revenue cycle and detailed work-relative value unit (wRVU) reporting to improve physician satisfaction and identify opportunities for increased revenue. The exhibit below outlines key metrics by revenue cycle area.
Key Metrics by Revenue Cycle Area
The physician revenue cycle provides a unique opportunity for engaging directly with physicians in particular to improve performance on key metrics. Under many physician compensation models, improvements to the health system’s finances directly benefit individual physicians, which increase buy-in and engagement. Benefis developed partnerships across the revenue cycle and with physician leaders, practice administrators, and IT to develop and implement reporting for physicians and practice managers that would enable them to address inefficiencies or process breakdowns.
Physician productivity, as measured by wRVUs, is one of the elements used to determine physician compensation at Benefis. The project improved the information available to assist physicians and administrators in meeting production targets. The new report structure consolidates monthly RVU information from both hospital and physician billing systems, and measures the performance of each physician by specialty against both national and regional benchmarks, including MGMA RVU benchmarks. Each month’s data are trended against previous performance and incorporated into a year-end projection, allowing reviewers to identify focus areas and implement action plans.
Detailed drill-downs enable users to identify root-cause issues for underperforming providers by comparing specific CPT code use and service mix (e.g., evaluation and management codes versus procedures) against other providers in the same specialty. Aggregate data on gross and net revenue per RVU by provider allows administration to quantify the financial impact of working with a physician to improve his or her productivity, which creates a justification for the use of administrator time as well as a compelling argument for physician engagement. The reporting can support the need for additional productivity, or in some cases, it can highlight where the organization can knowingly accept lower productivity levels that are appropriate for patient safety reasons—for example, in the neonatal intensive care unit (NICU), there is a need to maintain physician availability even when NICU volume is low.
Role of Physician and Finance Leaders
For a medical group revenue cycle improvement initiative to be successful, the initiative requires a strong physician leader to serve a formal oversight and governance role. In Benefis’ case, the chief medical officer (CMO) assumed this role, but it can just as well be filled by another physician executive. Ideally, the physician leader should work directly with a finance leader who can provide additional support and leadership for the initiative; at Benefis, this role was filled by the health system CFO.
One of the two leaders’ first orders of business was to obtain insight into the organization’s actual performance and the associated challenges, recognizing that organizational perceptions and reality often can be quite different. For this purpose, they engaged a third party to perform a review of the organization, including the use of systems and workflow processes, and to help identify any potential black holes and organizational barriers. Having an outside party conduct the review was deemed necessary for two reasons: First, an objective, impartial review would not be encumbered by current perceptions that could inadvertently deflect attention from reality, resulting in either delays or limited organizational success. Second, the organization would be challenged to bring sufficient internal resources to bear to perform the required tactical work, thorough analyses, and hands-on reviews.
This initial review provided the insight and perspective Benefis required to develop a clear strategy and implementation work plan focused on improvements and results within a specific time period.
Within this larger context, it bears reemphasizing that the role of the physician leader as a champion for the work, and the importance of it, is critical. Physician leadership combined with financial leadership support enabled Benefis to build and reinforce a strong strategic direction throughout the organization.
Benefis’ physician revenue cycle improvement initiative produced strong results that were both quantitative and qualitative.
From a quantitative standpoint, the multifaceted improvements led to significant financial benefits for the health system in the first year following implementation, including the following:
- A $1.9 million annualized improvement in total cash posted (a 4.1 percent increase over the previous year)
- Reductions in gross A/R and net A/R of reduction of 2.8 days (4.9 percent) and 9.9 days (23.2 percent), respectively
- An 83.4 percent increase in annualized point-of-service collections
- An 81.7 percent reduction in annualized provider enrollment-related write-offs
In addition to these financial improvements, the focus on interdepartmental communication and oversight led to several intangible—or qualitative—benefits. Knowledge of revenue cycle processes improved among clinic staff and management teams, which allowed for more proactive identification of issues and effective conversations with revenue cycle leadership. Communication channels improved across departments, silos were broken down, and collaboration between operations, information services, and the business office greatly improved. Patients now have a more consistent experience at any Benefis location, and education on potential liabilities and financial assistance options can be provided at any access point. In addition, with improved access to data and reporting, managers and directors across the system are more confident, proactive, and effective in engaging physicians and addressing issues that affect their departments and the health system.
Keys to Sustainability and Continuous Improvement
Benefis Health System is well-positioned to build on its initial success and realize additional financial and operational improvements. Benefis leadership is committed to ongoing improvement, and executives across the system have incorporated aspects of the physician revenue cycle initiatives into their annual performance goals—for example, maintaining POS collections at or close to target and maintaining avoidable loss write-offs at or below the target level. The steering committee formed for the project continues to drive interdepartmental communication and improvements, and the new reports are distributed and reviewed during key meetings. By regularly monitoring key metrics, setting challenging but achievable goals, and maintaining a focus on accountability at all levels, Benefis Health System is well-positioned to further its mission to “provide excellent care for all, healing body, mind, and spirit.”
Greg Tierney, MD, is chief medical officer, Benefis Health System; president, Benefis Medical Group; and Sports Medicine Specialist, Benefis Orthopedics, Great Falls, Mont.
Cathy Smith, FHFMA, MS, CIA, CISA, CFE, is a managing director, The Claro Group, Bellevue, Wash.
Eric Wilberg, MBA, CHFP, is a senior manager, The Claro Group, Denver.
a. Peckham, C., Medscape Physician Compensation Report , April 21, 2015.
b. Florence, T., “Trends in Physician and Advanced Practitioner Performance,” Candidate Corner, Merritt Hawkins, June 30, 2014.
c. Lauer, V., “The Pursuit of Balance—How Lifestyle Drives the Employed-Physician Model,” MD News, Aug. 31, 2015.
d. Rosin, T., “Moody’s: High Rate of Physician Employment Linked to Lower Profitability,” Becker’s Hospital CFO, Dec, 9, 2015