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Blog | Revenue Cycle

Overcoming Internal Threats to Revenue Cycle Performance

Blog | Revenue Cycle

Overcoming Internal Threats to Revenue Cycle Performance

Kent Ritter describes the effect of organizational growth on the revenue cycle.

The current era of health system growth and consolidation has bred internal disconnects that threaten revenue cycle performance. Maintaining a focus on accountability—providing clear expectations and tracking those measures—is essential for addressing these internal challenges.

The principle of accountability can be translated into concrete actions that apply to the entire revenue cycle, individual departments, and external vendors as well as to individual staff.

The Context: Growth Without Standardization

To grapple with new financial pressures and capitalize on the upside of consolidation, health systems today are acquiring hospitals and physician groups at a fast clip. Too often, this growth is not matched by the appropriate revenue cycle scale-up. Despite their adeptness at cultivating clinical alignment between hospitals and physicians, health systems have struggled to achieve similar alignment in the revenue cycle space. The additional complexity and volume introduced is left to be handled piecemeal, according to the idiosyncratic practices of the legacy organizations.

This disconnect can exist for various reasons: It can come from having conflicting ways of approaching the same process, from not having the right people in the right roles, or from gaps in the skill sets of executive leaders who are charged with managing the newly expanded health system.

For example, one health system’s transitional growing pains were a result of having 11 hospitals with each hospital being supported by four coding groups and four separate coding directors (for a total of 44 coding directors) who reported to the individual hospital’s CFO. That kind of fragmented organizational structure dilutes accountability and introduces confusion about prioritization and how performance measures will be evaluated.

Responsible Growth

To achieve the highest level of revenue cycle performance, health systems should pursue three levels of integration, each one a prerequisite for the next.

Standardization. Before any efficiencies of scale can be achieved, people across the organization must be aligned in their processes. It’s difficult to consistently manage disparate coding departments that do things differently. To measure performance consistently and accurately, health systems must standardize processes among departments.

Consolidation. Only after operations are standardized, and the means for resolving revenue cycle problems has been identified, can management and organizational expectations be consolidated. An essential action in this step is to choose, as the single point of accountability, an individual who also can hold his or her staff accountable to the newly aligned standards.

Centralization. Although many health systems begin with centralization, this step actually should be the last in the process. One health system, for example, sought to centralize physician scheduling and put call-center employees in the same room, answering about 80 different numbers, before standardizing processes. As a result, the health system had poor customer-service responses, and it was able to improve them only after it addressed the need for standardization (in this case, the numbers customers were using) and consolidation (i.e., the expectations for the customer-service representatives and how their performance was measured). Centralization can happen only after an effective, scalable organizational structure has been constructed around a single, well-communicated way of doing things. 

Growing responsibly through these levels of integration requires clean reporting. The risk of scaling up should be minimized through reliable monitoring; leaders require the reporting capacity to learn about stumbling blocks or operational bottlenecks quickly enough to prevent significant losses.

Effective Reporting: The Key to Accountability

The importance of reporting extends beyond the unique circumstances of new acquisitions or expansion. Ultimately, reporting goes hand-in-hand with the answer to most internal obstacles to performance: accountability.

The first step to establishing a culture and practice of accountability is deciding on the metrics used to judge success. After defining the key performance indicators for the organization, leaders should define the acceptable range of performance for each indicator—and then convey this information explicitly to departments and team members. Once a productivity measure is established, it should be enforced, with the help of the human resources department. There should be incentives for performance, adequate opportunities and support for people trying to meet the metrics, celebrations when metrics are met, and real consequences when they aren’t. These expectations should be included in each employee’s job description. Data can be especially useful when managers must decide to let an underperformer go.

Accountability Starts at the Top

Accountability of leadership is just as crucial as that of individual employees. Cascading dashboards are one way to ensure leaders at each level has the information they need to understand performance and hold their teams accountable. The vice president of revenue cycle should have access to the key performance indicators he or she tracks and be held equally accountable for the success of the revenue cycle. Access to data around the top metrics spanning the entire revenue cycle—usually 10 to 12 indicators that are critical to success across the revenue cycle–can help leadership assess the health system’s performance against core metrics of that area.  

Accountability in Vendor Relationships

A similar template applies to performance management. Much like individual performance, expectations should be clearly outlined in the contract, with incentives for good performance or penalties for poor performance (or both). As the contract is executed, the relationship requires day-to-day management—particularly the rigorous assessment of how the vendor is meeting the expectations laid out in the contract.

A Culture of Accountability

The revenue cycle holds a wealth of information related to charging, payment, and other performance measures that is of little use if it remains within the revenue cycle. Clinicians and operations staff should be educated about charging errors and denials.

Denials, for example, don't really occur on the back end in the business office. They result from the clinical interaction with the patient, during patient access, and during coding. The revenue cycle should be structured to help physicians, nurses, coders, case managers, and others understand the downstream effect of denials and to emphasize these individuals’ roles in preventing them.

With an organizationwide approach to standardization and accountability, the growing pains that come with consolidation can be transformed into opportunities for efficiency.

Kent Ritter is the director, revenue cycle for Navigant, Chicago. 

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Kent Ritter

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