To Improve Hospital Collections, Move Revenue Cycle Up Front

Redesigning the revenue cycle to make it a more front-end driven process is one strategy hospitals and health systems should consider when looking for ways to improve collections.

That's what MetroHealth System, a 731-bed health system based in Cleveland, set out to do when it launched its pre-service center in Q4 2012. The concept seems relatively simple: Once a patient is scheduled for an appointment, a representative in the pre-service center automatically receives the information from the scheduling department and begins the work of verifying insurance information and eligibility, requesting preauthorization approvals, and determining the patient liability.

"The pre-service center picks up where scheduling leaves off," says Craig Richmond, MetroHealth's vice president, revenue cycle. "The patient may have insurance, but that doesn't mean it will cover a particular procedure, or we might need to obtain some type of authorization. If we don't get that prior to when the patient arrives, we won't get reimbursed."

Although the idea of collecting money up front—or at least verifying insurance details to be certain the payer will ultimately reimburse for services—seems basic, it's surprisingly uncommon in the healthcare industry, where much of that work is typically done on the back end.

MetroHealth's new approach is a "paradigm shift," Richmond says. "The objective here is about shifting more to the front end of the revenue cycle… If you get it right on the front end and secure payment on the front end, you are reducing your cost to collect, and you are reducing your bad debt exposure."

"The reason I am so passionate about the pre-service center is it is part of the front end of the revenue cycle. The focus has always been on the back end. If we can get it right on the front, it mitigates any surprises on the back. If you can minimize the rework, you are able to reduce costs," he adds.

The pre-service center's 12 full-time employees have also been trained to call patients who are scheduled for an appointment for which there will be a substantial out-of-pocket responsibility.

"If they do have a responsibility for a high amount out of pocket, we do outbound calls to inform them. There is an opportunity here to educate patients so they don't get the sticker shock on the back end. It's also to engage with them. If they don't feel they can pay, we'd rather have that discussion up front than after they have received care," Richmond says.

During the call, patients are also offered the opportunity to prepay their bill.

"As we are telling the patient about their out-of-pocket responsibility, we ask if they would like to make a payment up front. Some do, and some want to wait until the time of service. It's not about collecting payment at this point. The main thing is about educating them about their responsibility," Richmond says, noting that so far, MetroHealth is collecting about 15% of patient balances up front.

"Right out of the gate, we started seeing some success. … We've even seen some collecting of dollars right from the start. It's a small amount, but it is still a success," he says.

Richmond believes another major advantage to creating a front-end driven revenue cycle is it takes the administrative work out of the clinical setting and improves the overall experience for both patients and physicians.

"High-performing revenue cycle departments have shifted from back-end to front-end processes. It allows the clinical sites to focus on patients while administrative processes can occur in the background… It is about separating the administrative process from the clinical encounter."

"It lets the patient focus on their care. In essence, they arrive, have a quick check-in, and the physician can see them on time. You have a happier patient and a happier physician. Otherwise, it just winds up not being the ultimate experience for either party," Richmond adds.

Before the pre-service center went live, Richmond spent a considerable amount of time educating people within his organization to prepare them for the new business model and to try to overcome any cynicism.

"I wanted everyone to understand how it could impact the patient experience and the physician experience. I did presentations among many physician practices here, as well as a lot of education and discussion forums. That doesn't mean people weren't skeptical, but the proof is in the pudding," he says.

Richmond will share his story during his presentation, "How a Pre-Service Center at MetroHealth System Improved Satisfaction, Efficiency, and Revenue" at HFMA's ANI conference in Orlando on June 18.