If your boss offered you a $10,000 raise, would you turn it down? Of course not!
That’s essentially what physician practices, hospitals and other healthcare providers are doing by using outdated processes to manage their revenue cycle or fail to address problems within it. Some providers might solely focus on the front-end of the revenue cycle, but not pay much attention to issues affecting the back office, thereby neglecting steps that could optimize their reimbursement. Others simply don’t pay enough attention to their front-office functions, resulting in difficulties with insurance eligibility verification and patient registration.
Healthcare providers striving for a strong revenue cycle must employ comprehensive procedures and processes from the front-end to the back office, leaving no step incomplete. Otherwise, they risk unnecessarily losing out on thousands of dollars in reimbursement from patients and payers. By implementing an end-to-end revenue cycle – using best practices from patient registration all the way through to final payment of a balance – physician practices and hospitals can achieve financial sustainability.
Obstacles to Optimization
As with many processes that healthcare providers utilize, there are challenges to attaining and maintaining a streamlined revenue cycle. Several of these obstacles were outlined in two industry surveys, the first from the Healthcare Financial Management Association (HFMA) and the other courtesy of the Medical Group Management Association (MGMA).
HFMA polled 108 hospital and health system chief financial officers, and the majority (62 percent) of them reported electronic health record (EHR) adoption challenges have been equal to or outweigh the benefits specific to their organizations’ revenue cycle performance. Similarly, MGMA surveyed 825 healthcare leaders, 48 percent of whom named claims payment as their biggest revenue cycle challenge.
Other barriers to a robust revenue cycle include:
- Complex reimbursement models
- Demanding consumer expectations
- Increased claim denials
- Incomplete clinical documentation
- Unpaid patient balances
- Lack of advanced metrics
- Inadequate reporting capabilities
- Insufficient staff training
Another substantial hurdle for healthcare providers in maintaining a strong revenue cycle is the issue of leakage due to one or more of a myriad of errors and oversights, including incomplete or unbilled procedures and claims, inaccurate charge capture, human error, inadequate staff training, unverified insurance, denied appeals, coding inaccuracies, outdated procedures and technology and more. In fact, patient revenue leakage costs healthcare facilities 10 percent of their revenue, and a typical hospital can expect to lose between one and five percent of net revenue due to leakage from reimbursement issues.
Problems with Outdated Processes
Healthcare providers that fail to streamline and automate their medical billing process jeopardize the financial sustainability of their practice. Perhaps surprisingly, many physician practices and hospitals still utilize traditional methods (i.e. index cards, face sheets) to manage their billing cycle. According to a survey conducted by HIMSS Analytics, of 900 healthcare financial executives, nearly all the respondents report using paper-based medical billing, even though more than half their patients prefer electronic patient financial responsibility billing systems.
This outdated method not only slows the billing cycle but also increases inaccuracies, incomplete clinical documentation, collection costs and backlogs; decreases coding efficiency and staff productivity, negatively affects office workflow, and lowers payment rates. These issues cause some charges to get billed late or even not at all.
Healthcare providers employing this practice must store necessary documentation, resulting in extra costs and an increased possibility of patient records being destroyed in the event of a natural disaster. They also face a higher risk of patient data being compromised, an occurrence that can result in hefty penalties and fines. Criminal penalties for HIPAA violations vary from a fine of $50,000 and up to a year in prison to $250,000 and up to ten years of jail time.
Recouping Lost Revenue
It is possible for physician practices and hospitals to recoup lost revenue, provided they implement utilize the correct technology and processes to increase revenue, reduce billing time and receive more timely payment. This can be managed through proper claims and denial management, utilization of real-time analytics and reports, following the right key performance indicators (KPIs) and streamlining check-in and checkout processes. The key is using solutions such as those for electronic charge capture and automated medical billing that solve most any revenue cycle management issues you encounter.
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