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Hospital Execs Name Top Revenue Challenges

March 18, 2013

With changing reimbursement models and an increase in the self-pay population eating into margins, healthcare executives know it's becoming more important than ever for hospitals and health systems to collect all the money they are owed for services rendered.

No one can afford to leave money on the table because their revenue cycle processes don't run as smoothly as they should. But raising collection rates is more easily said than done. And it's among the biggest challenges facing three healthcare financial administrators with whom I recently spoke.

Collecting more up front

H. Jeffrey Brownawell, chief revenue officer at Memorial Hermann Health System, a Houston-based organization with 3,508-beds, says the principal challenge he sees is finding ways to collect as much money as possible before services are provided.

"One thing I would say is, man, you really need to go get all the money you are owed. As an industry we haven't done that as well as we should have. We're trying to look at how our process can be more efficient up front. On the hospital side, you need to collect money up front because the likelihood of collecting drops if you don't," Brownawell says.

He admits that there is room for improvement around upfront collections at his organization but says the nature of emergency care makes it tough. "We are collecting a lot of cash up front, but we are not doing as well as we could. Right now you can't go to any other part of healthcare—to the dentist or a physician's office—and have service without paying up front. But people still come into the hospital all the time through the ER, and there is no good way to collect up front."

Keeping up with payer changes

A major obstacle for the revenue cycle is trying to stay apace of the steady stream of changes from payers, says Keith Eggert, vice president of revenue management at Orlando Health, a 1,780-bed family of facilities based in central Florida.

 "One of the biggest challenges has to do with keeping up with payer changes as payers are adopting different classifications for denials, whether it be partial denials or penalties. The game is constantly in flux," he says.

Orlando Health is always "trying to keep the revenue cycle ahead of (the changes) so we don't end up being penalized financially for not jumping through a hoop," Eggert adds.

In an effort to be as prepared as possible to stay ahead of payer shifts—and to handle a host of other revenue cycle functions—Orlando Health has spent the last four to five years automating most of its revenue cycle processes, Eggert says.

"If you are a totally manual operation, then you are reliant on someone to see a trend," he says, noting that with an automated process, it is easier to spot patterns in claim denials through the reports and daily dashboards the system generates.

The real-time data that is available is invaluable for identifying these trouble spots, Eggert says. "Not that you can solve it right away, but at least you are aware of it."

Bob Reilly, chief financial officer at Anne Arundel Health System, a 324-bed system in Annapolis, MD, thinks the toughest challenge impeding successful revenue cycle management is all the ambiguity surrounding the change in payment models and what that will really mean to the business of healthcare.

Dealing with uncertainty

"I would say one of the biggest challenges is the uncertainty of future revenue streams as we move toward population health management from the traditional healthcare model," he says. "How do we continue to give top-quality care under shrinking revenue models and still invest in care out in our community, outside of our four walls?"

Reilly is also concerned with creating a revenue cycle process that adds value to the patient experience. "If they don't think the process is adding value … that can distort the patient's point of view about their experience and how satisfied they are. And in the days of transparency, all of that gets reported. It's out there on the Medicare website."

In addition to the challenges posed by forces outside of the hospital, there is also an important internal struggle for hospitals to contend with, Reilly says. "You still have to partner with clinicians—that's one of the most important challenges for a lot of organizations, to partner with clinicians to ensure appropriate documentation and coding. If you don't have a really streamlined process on the front end, it is going to result in denials on the back end."

Reilly sums it up with a comment that echoes much of what I heard in my conversations with all three healthcare leaders: "In the end, it all stems from having an efficient revenue cycle system and from collecting the right information at the right time."

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