5 Keys to Revenue Cycle Performance Improvement

John Muir Health launched an innovation initiative, added beer, and exceeded its first-year revenue goal.

Innovation and performance-improvement initiatives were among the primary focal points at HealthLeaders' annual Revenue Cycle Exchange, which was held last week at the Omni Tucson National Resort in Arizona.

Among the highlights of the event was John Muir Health's report of significant financial gains from an innovation initiative that the Walnut Creek, CA-based health system calls "Revination."

The two-year, board-approved initiative has "top-line revenue implications as well as cost reduction components," said Joshua Welch, executive director of revenue cycle at John Muir, which includes two medical centers and a medical center affiliate.

Welch identified five elements of the initiative:

1. Increasing payer yield through claims-denial management
2. Maximizing patient payments through efforts such as point-of-service (POS) collection gains
3. Advocacy work to help patients secure healthcare coverage and other financial resources
4. Vendor utilization management
5. Driving cost savings through performance improvement

Another component "is just having fun," he added. "We brewed Revination Ale, and it was good. I put together some Revination survival packs for my directors and managers that had beer, pretzels, mustard, and all kinds of fun stuff. There is a lot of recognition for our employees."

First-Year Results
The initiative generated big gains in its first year, with the health system beating Revination expectations in 2016.

"We had set a Year 1 goal of about $6.8 million in top-line revenue benefit for the organization and about $1.2 million in cost reduction. We actually blew the revenue goal out of the water, with an $8.1 million increase," Welch said.

Cost savings were just $44,000 shy of the Year 1 target.

In 2016, ROI on $1.5 million in Revination costs was twice as high as forecast, with an expected net benefit to cost ratio of 2.5 and an actual ratio of 5.2. Year 1 initiative costs included a new claims-processing platform and staff-engagement spending such as gift cards that accompany Revination Certificates awarded to nine employees per month in three categories (saves, heroic effort, and quality. Staff from across the organization eligible for the recognition.

"In Year 2, the bar is raised, and we are living that right now. We are tracking a $13 million [total benefit] target, which represents about 1% of net patient revenue at John Muir—we are about a $1.3 billion organization," he said.

Generating New Revenue and Cost Savings
The health system has several vendor partners playing revenue cycle roles, which presented a cost-reduction opportunity.

"We had weekly calls with them to not only explain the Revination initiative, but also explain how we wanted to improve our performance across revenue cycle. They do so much of our business, it was important that we share the same goals."

Selectively adding new vendors generated most of the Year 1 cost savings, Welch said.

"Where we had one vendor previously, we put in champion-challenger models where vendors are working side-by-side on half of the inventory to create natural competition… The champion-challenger vendor model gave us a little rate arbitrage."

Improved revenue cycle team performance in front-end activities was a key element of Year 1 increased revenue. The team "spent a lot of time developing reports, identifying risky accounts, and shoring up other processes that yielded a lot of the revenue benefit."

Energizing the revenue cycle team "continues to be one of the most important elements of the initiative and achieving incremental performance improvement," Welch said.

He is confident John Muir can meet or exceed Year 2 Revination expectations.

"We know we have opportunities even though we have gotten all of the low-hanging fruit in Year 1. This is really about getting at the claim denials and optimizing organizational performance."

This year's Revination goals include boosting monthly POS collections from $500,000 to $750,000 and launching a Denials Avoidance Taskforce drawn from across the organization, including revenue cycle, contracting, case management, information technology, and compliance.