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Analysis

Connecticut Children's, Guidehouse Form RCM Company

By Jack O'Brien  
   July 27, 2020

The Children's Health Consortium will officially launch in early 2021.

Connecticut Children's Medical Center and Guidehouse announced Monday morning an operating agreement to create a new revenue cycle management (RCM) company servicing children's hospitals across the country.

The Children's Health Consortium will be jointly owned by both organizations and manage the RCM operations at Connecticut Children's, including at its outpatient facilities and physician group.

Future plans for the consortium include expanding services to add other children's hospitals as members and offer access to "industry-leading RCM processes, technology, and expertise."

The consortium will officially launch in early 2021.

Connecticut Children's is a nonprofit medical center based in Hartford, Connecticut with a total patient revenue of more than $840 million, according to the American Hospital Directory.

Jim Shmerling, DHA, FACHE, CEO of Connecticut Children's, told HealthLeaders that Guidehouse had assisted his organization on identifying improvements in RCM operations and wanted to extend the opportunities to other children's hospitals around the country.

"As we're talking to Guidehouse, they've done this on a much bigger scale with large adult systems, but not in children's hospitals, and so we thought, 'Let's pair up your experience and expertise with adult systems with what we're trying to do in a children's hospital,'" Shmerling said. "Maybe [we can] bring in some additional children's hospitals and create a joint venture that allows us to get economies of scale and do this across a much broader spectrum of hospitals across the country."

Shmerling added that the combination allows for Connecticut Children's to move from a fixed cost structure to a variable cost structure, which is crucial to maintaining financial efficiencies during the coronavirus disease 2019 (COVID-19) pandemic.

As Shmerling mentioned, Guidehouse has already assisted with improving RCM functions at major acute care health systems.

In July 2018, then-Navigant Healthcare and Baptist Health South Florida (BHSF) launched Health System Solutions (HSS), a revenue cycle joint venture (JV). In its first year of operations, HSS delivered an increase of $28 million in net patient revenue.

Additionally, BHSF's point-of-service collections rose 9%, cost-to-collect dropped from 2.9% to 2.6%, and the monthly cost acceleration increased to $15 million.

Related: Revenue Cycle Venture Brings Together Navigant, Baptist Health South Florida

Related: Financial Turnaround: How Baptist Health South Florida Boosted Net Patient Revenue by $28M

Ian Stewart, a senior vice president at Guidehouse, has prior experience working at Advocate Aurora Health and Children's Minnesota, and told HealthLeaders that children's hospitals frequently "get lost in the acute care spaces" by vendors.

"It just made good sense to put a consortium together that would kind of offer the leading revenue cycle process and technology that's focused on children's hospitals only," Stewart said. "[Being focused] on the issues and the nuances of getting to scale by offering members the ability to join a consortium like this is something that I've been pursuing for a long time. [It also allows] Guidehouse to continue to find offerings that bring value to member institutions like the children's hospitals."

In his final comments on the consortium, Shmerling added that while some other hospitals and health systems have suffered through financial pressures related to the pandemic and either been bought or closed, children's hospitals have a strong track record of developing partnerships and sharing "mutual expertise" with peer organizations.

"We already do group purchasing together because we know that aggregating our purchases is much more efficient and cost effective, and I think this will be another example of children's hospitals coming together, becoming more efficient, and doing a better job of managing our cost structure and improving the revenue cycle," Shmerling said.

Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.


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