Healthcare finance teams face growing demands to manage payment complexity and the revenue cycle processes more efficiently, with team sizes generally not expanding to match organizational growth.
How can leaders position their systems to meet today’s evolving challenges? Simon Abtalion, National Client Solution Executive for Global Commercial Banking with Bank of America, stresses that process automation is crucial. However, managing it requires rethinking technology and partnership strategies. During a private roundtable discussion, revenue cycle leaders explored top vulnerabilities, best practices, and risk mitigation. Abtalion shares key conclusions from this conversation, including how healthcare finance teams can achieve more with less while maintaining a best-in-class environment.
Q: What pressures are driving the need for automation?
Abtalion: Today’s health systems face declining operating revenue, lower reimbursements, and high labor costs, all of which place an increased burden on revenue cycle and treasury teams. They also must manage an amalgamation of technologies and IT systems due to a surge in M&A activity in recent years, as well as systems migrations, updates, and introductions. This forces leaders to balance core business functions while also keeping a watchful eye on the evolving technology landscape to capture needed automation levels.
Q: What challenges did the participants face at their hospitals regarding the “do more with less” operating model?
Abtalion: Each revenue cycle leader shared that leveraging technology and using it to drive automation enabled their team to “do more with less;” however, they each also shared that introducing new technology via new vendors can lead to a vendor management challenge. To address this, health systems use three main approaches to vendor management: One is assigning a directly responsible individual to cover all of these relationships, which includes oversite of coding and upkeep while driving accountability for KPIs assessed via annual business reviews. Another approach is to have one person per IT vendor to manage the relationship, maintaining integrations and ensuring accountability. The last group outsources vendor relationship management to a third party that is accountable for vendor performance.
Q: How often did participants mention reviewing processes, products, and people to maintain a best-in-class environment?
Abtalion: Participants said they do numerous reviews during budgeting season, as well as ahead of any significant platform migration, to assess headcount and IT spend for the year(s) to come. Another common best practice is holding annual meetings with lead technology vendors to review performance and new functionality. Organizations are leveraging their banking relationships to supplement these activities. Participants said quarterly meetings with their bank offer a better understanding of peer-group best practices, informing decision-making and strategy. National commercial banks specializing in healthcare can provide a wealth of best practices and possess unique insights into data and funds flow and third-party relationship management. They offer helpful solutions for similar problems, such as payer habits and digital patient engagement.
Q: How do participants manage to stay current with evolving and disruptive technology, and do you have any recommendations?
Abtalion: They stressed the value of bouncing ideas off a peer network, attending conferences and thought leadership events, staying updated with healthcare periodicals, and leaning on banking partners. They are interested in banking technology investments to understand how banks work with payers, providers, and patients to remove paper from the ecosystem, drive direct connectivity, and lower operational costs. Also, revenue cycle leaders must stay on top of their platform’s development plan and its alignment with their strategic goals. Ultimately, organizations can position themselves for success when they communicate with their technology and banking partners and peers about areas requiring support, such as robotic process automation, machine learning, and artificial intelligence.
Q: What processes stood out as most important to automate?
Abtalion: Participants emphasized the importance of automating the collection of comprehensive data upfront during patient registration and maintaining authorizations and data integrity throughout the revenue cycle, as deficiencies in those key data elements result in delays to claim submission, adjudication, and payment. They went on to stress the importance of automating price transparency post the “No Surprises Act” and how it forced their teams to create a process to ensure the necessary cost information remains both available and current.
Additionally, revenue cycle teams continue to focus on normal automation goals, such as accelerated cash posting, driving direct connectivity with payers and clearing houses, while also deploying paper-to-835 conversion solution sets that incorporate correspondence indexing and enable the creation of a zero-pay 835 from a denial letter.
Q: How do you foresee emerging technology being used to address healthcare challenges?
Abtalion: With major acquisitions, such as Oracle’s purchase of Cerner, we can expect the gap to narrow between the ERP and PMS functionality, leading towards a single system of “truth” that manages accounting for various reimbursement models, patient engagement, and vendor management. These systems will also embed bank payment methodologies, shaping the future of healthcare IT and financial management. Patient experience vendors will continue to gain traction as the user experience remains a driving factor in net promoter scores, while commercial pay automation tools will continue to surge. Forward-thinking organizations are already automating repetitive tasks such as data, file, and record pulls, and many other systems will follow suit in the coming years.
What does cyber fraud look like for a hospital or a healthcare group? Where does it happen, and how can organizations protect themselves? As you assess the security of your organization, here are top trends, emerging threats and things to consider.
1. Don’t forget the basics
As complicated as cyber fraud may seem, don’t forget the basics. The scariest headlines for healthcare executives are about fraudsters using ransomware to shut down a system, as happened to the UK’s National Health Service in 2017. But a breach doesn’t require sophistication. “A lot of cyber fraud continues to be perpetrated via good old-fashioned phishing techniques,” says Charles Alston, Market Executive at Bank of America Merrill Lynch. “Fraudsters send an email that gets them into an organization. Then employees, oftentimes even though thoroughly trained, can make an error in judgment by clicking on a link or responding to a fraudulent email. That one action ends up pulling a thread that creates a system wide problem.”
2. Watch for wire fraud
In addition to straightforward check and ACH fraud, “Healthcare is just as susceptible as any other business to wirefraud,” Alston says. In a wirefraud, the fraudster sends an email to a treasury employee that appears to be from a top-level executive in the organization; often it will be sophisticated enough to mimic the executive’s writing style, or arrive when the exec is at a conference or on vacation, and hard to reach. The message asks the recipient to wire funds to an account—again, presenting it as an emergency or time-sensitive situation. The recipient is reluctant to turn down the request, since it’s coming from management. “People ask, ‘Why would a controller or treasury employee respond to an email like that?’” Alston says. “Well, it appears legitimate, and it’s a rare event; no one has likely seen something like that before.
And once that transfer is executed, the money is gone, because employees hadn’t been trained, or regularly reminded about such types of fraud, and there wasn’t a process in place to handle such situations. These are the situations that training can help avoid.”
3. Monitor for ransomware
Criminals’ use of ransomware is a threat that organizations should consider carefully, and will handle best if well prepared. One of the most effective preparation tools is a tabletop exercise that can walk the organization through a simulated ransomware event.
Doing a simulation can help answer the key questions: Would we be able to identify a situation and stop it? Would we be able to trace where it came from? Do we have all the right disciplines at the table? What kind of communications do we need to let people know what’s happening? Can we get the system back up? Many executives may be tempted to invest in cryptocurrency like Bitcoin, so they’re able to quickly pay in the event of a ransom demand, but should carefully consider whether paying a ransom is the best solution. Lynn Wiatrowski, National Treasury Executive at Bank of America Merrill Lynch suggests that healthcare providers, who often train for emergency medical events and natural disasters, can apply those learnings to handle a cyber fraud event.
4. Tighten provider-insurer connections
The connections between healthcare providers and insurance companies can create cracks where cyber fraud can flourish. “The structure of health insurance involves a lot of transactions and a slow process, a complicated architecture. And there
is a lot of money fueling the system,” says Roger Boucher, Market Executive at Bank of America Merrill Lynch. “The process of reimbursement creates a back and forth interaction that the patient never sees; it can be weeks or months of submission, denial, resubmission, correction, denial (again), before the bills are processed. That lag creates a vulnerability. With so much data traveling back and forth, and such delays in payment, crooks find a way to insert themselves in the gap.” He says healthcare providers need to assess, and continually re-assess, the reimbursement process to double check that insurance companies are sending payments to the correct entity
5. Protect patient data
Patient data needs to be protected in as many ways as possible. Not only do healthcare providers need to be cognizant of patient privacy and HIPAA rules, they need to continually remind themselves that patient data is currency for criminals. As patient records are migrated from paper to digital forms, organizations need to be vigilant in keeping track of older records and how they are handled, stored or disposed of. Policies need to be in place to ensure safety, for instance, when employees handle patient data while working at home. Similarly, to keep records safe and up to date, providers need to regularly back up the data contained in their computer systems. Organizations will complain that backing up the database for the entire system is too time-consuming, or creates too much downtime. A solution is to break the data into smaller pieces, backing up a department or a piece at a time.
6. Keep tabs on third-parties
Whether it’s insurance companies, labs, doctors’ offices or other partners, an organization is only as protected as the third parties it works with and shares its computer connections and its data with. “A healthcare organization should be asking, ‘Where is all my data going, and who is keeping an eye on it?” Boucher says.
A strong vendor management program should include regularly checking the data protection policies and cybersecurity procedures of vendors, third-party services and strategic partners to make sure everyone is on the same page. “When contracts are reviewed, there should be an opportunity to build on a security element as well as outline liability of loss, if those items do not already exist,” Alston says.
7. Secure new equipment
The industry has been buzzing about how new products in the internet of things and medical devices are offering new entry points into a healthcare system. “When a hospital is introducing the newest, most sophisticated piece of medical equipment, thoughts are on the difference this new technology will make in patients’ lives, rather than considering that the new technology may also be introducing a cyberthreat,” Wiatrowski says. “It is not second nature to think about who is on the other end of those pieces of equipment, and what entry points may be introduced.”
8. Stay alert for new threats
Finally, remember that the threat environment will continue to evolve. Stay updated on the newest forms of cyberattacks by reading trade publications, attending conferences and webinars to share information with your peers, and comparing notes with your own strategic partners about what they are seeing. Says Alston, “There is a lot more ground to protect if you are in a healthcare organization, and a lot more opportunity for fraud to occur. And it’s hard to stop something if you have never seen it before. That’s why ongoing education and training are so important.”
Learn how MAP activity is reshaping the healthcare landscape with these three key findings.
Mergers, acquisitions, and partnerships (MAP) show no sign of slowing down, and their momentum is expected to increase in the coming years, according to the HealthLeaders Media report Mergers, Acquisitions, and Partnerships: Examining Financial and Operational Impacts. MAP activity is “driven by the move to value-based care and provider needs for greater scale and geographic coverage,” says Jonathan Bees, senior research analyst at HealthLeaders Media.
The report also includes findings from a HealthLeaders Media survey, which polled 190 senior executives on recent and future MAP activity. The majority of respondents (71%) say their organizations plan to increase MAP activity in the next three years, with 68% exploring potential deals and completing deals underway over the next 12–18 months.
Here are three key findings from the latest wave of MAP activity.
1. MAPs lead to positive clinical and financial results
When healthcare organizations commit to a MAP activity, they are equally focused on meeting financial and care delivery objectives. Organizations cite a variety of financial reasons for pursuing MAP planning or activity, including to improve financial stability (63%), to improve operational cost efficiencies (61%), to increase market share in their geographical area (60%), and to improve position for payer negotiations (59%).
The results show that larger organizations are more interested in expanding geographic reach compared to smaller entities, which are more focused on meeting financial goals. Respondents say their top care delivery objectives include improving their position for care delivery efficiencies (65%), improving clinical integration (55%), and improving their position for population health management (54%).
Respondents are generally positive about MAP financial and clinical results. Nearly half (46%) say their net patient revenue increased following a recent MAP activity, while 28% report it remained the same. Only 6% experienced a decrease. Moreover, 73% of respondents expect the cumulative total dollar value of their organization’s MAP activity to increase within the next three years. Clinical markers are up as well, with 35% reporting quality outcomes increased after a MAP activity and 40% saying they remained the same. Patient readmission results were mixed. Forty percent mention they stayed the same, while 18% saw a decrease, and 11% experienced an increase.
2. New partnership deals are emerging
The majority of recent MAP activities don’t fall under a merger or acquisition category, technically. Twenty-nine percent of survey respondents report their most recent MAP activity was a contractual relationship that wasn’t an M&A. “The use of non-M&A partnerships is expected to grow because this type of agreement is typically less expensive than traditional M&A and usually doesn’t require an exchange of assets or a change of local governance,” according to the report.
In the broader healthcare environment, transformative developments are also taking place, says Brent McDonald, head of Healthcare Strategic Advisory Services, managing director at Bank of America Merrill Lynch. “The U.S. healthcare landscape is certainly undergoing changes that are beyond the more traditional horizontal (hospital-to-hospital) mergers,” he says, pointing to Amazon’s announcement that it will enter the healthcare space, United/Optum’s acquisition of DaVita Medical Group, and the contemplated merger between CVS and Aetna.
3. Why most deals fall apart
As a MAP comes together, the due diligence period begins, and so does the potential for derailment. Financial liabilities and cultural issues are the leading causes for shutting down a MAP deal. The top three financial reasons MAPs are abandoned before or during due diligence are concerns about assumption of liabilities (21%), costs to support the transaction were too high (19%), and concerns about price (19%).
The operational reasons for backing out of a MAP include incompatible cultures (30%), concerns about governance (24%), and concerns about the operational transition plan (21%). Cultural clashes can occur at every level of the organization. "Oftentimes, you have cultural compatibility at the senior level (those who are consummating the deal), but find that culture throughout the remaining levels of the organization is not as conducive to a merger," says Pamela Stoyanoff, MBA, CPA, FACHE, executive vice president, chief operating officer at Dallas-based Methodist Health System, and lead advisor for the HealthLeaders Media MAP survey. “That is something you don’t necessarily see until later, after the deal is done.”
Don’t lose sight of your key stakeholders
In this period of heightened MAP activity and an uncertain future, it’s important that healthcare organizations focus on building sustainable consumer-centered care models. It is critical to set strategic goals that strengthen an organization’s relevance with and attractiveness to employers and payers, as well as increase patient convenience and connectivity, says McDonald. “It would be prudent to keep a keen focus on positioning health systems with their key stakeholders in mind and on becoming/continuing as the healthcare delivery network of choice and a ‘must have.’ ”
In this era of new technology, regulatory change and industry consolidation, healthcare providers face an array of cash reconciliation challenges. Following are eight best practices from an industry roundtable discussion among financial and treasury executives of 17 Mid-Atlantic hospitals and health systems
1. ADOPT A FORMAL CHANGE MANAGEMENT DISCIPLINE
Whether it’s new management, new patient accounting systems or new ways to interact with patients, change is a major factor impacting the financial operations of any healthcare provider today. “Providers need to instill a change management discipline into their financial organizations,” says Chuck Colliton, senior treasury sales manager, Bank of America Merrill Lynch.
2. BREAK DOWN CORPORATE SILOS
Hospital systems have good reasons for separating hospital transactions from physician transactions: They differ in complexity. But there is a way to bridge that gap. Consolidating activities into a centralized business office (CBO) or shared service operation that spans both sides of the business can simplify payment gathering.
3. RATIONALIZE BANK AND PROCESSOR RELATIONSHIPS
Some banks offer less expensive collections-only depository accounts without disbursement capabilities. Assigning one sub account to each healthcare facility can enhance cash reconciliation. Consolidating merchant processing relationships can also create efficiency, given an influx in patient credit card payments.
4. GO CASHLESS
“Some clients are no longer accepting cash for patient payments in physician offices, and some hospitals are getting rid of cash in their cafeterias,” says Kristen Space, senior relationship manager, Bank of America Merrill Lynch. One hospital executive reported saving $100,000 in courier fees annually by minimizing cash. Another pointed to the security benefit of going cashless after an employee fraudulently took funds.
5. PROMOTE ADVANCE AND POINT-OF-SERVICE COLLECTIONS
As patient payment volume grows, many providers collect co-payments in advance of appointments, and collect the remaining deductibles at the point of service. But early collection might require a culture change from front desk employees. “You need to explain to staff that you’re not doing this to be disruptive to the patient,” Colliton says.
6. AUTOMATE PATIENT REFUNDS
Providers traditionally refund patients by issuing checks, which add costs, may require manual intervention, and impose on some patients a trip to the bank. That’s why some providers are seeking out electronic alternatives, such as prepaid cards, which don’t even require a patient bank account. Another is an alias-based payment method such as Bank of America Merrill Lynch’s Digital Disbursements, where all a provider needs to initiate payment is a patient’s email address or mobile phone number.
7. PRESENT FRICTIONLESS WAYS TO PAY
Many of the new patient accounting systems process credit card payments and offer clinical portals where patients can review billing information and make card payments, but may also require patients to obtain a unique registration code for each doctor’s visit. Some bank payment portal offerings, such as Bank of America Merrill Lynch’s Healthcare Revenue Manager, bypass registration by integrating directly into a provider’s secure website.
8. OFFER INSURERS PAYMENT OPTIONS
Not all payers, particularly smaller ones, can send 835 remittance data. As a result, providers may want to consider a solution like Bank of America Merrill Lynch’s HealthLogic, which enables payers to send checks with paper remittance advices to a lockbox and create electronic remittance advices with the 835 standard.
As providers set powerful goals for the future, they are seeking strategic partners who can fill critical competencies.
Value-based care, population health management, clinical integration, and changing physician payments are just a few key reasons why providers are entering into mergers, acquisitions, and partnerships today. Each of these areas involves capital-intensive goals, which are motivating providers to partner with organizations who can shore up specific weaknesses. “Providers are seeking partners with the right combination of capital, infrastructure, intellectual property, and technology,” says Brent McDonald, head of healthcare strategic advisory, managing director at Bank of America Merrill Lynch. “We are seeing mergers that have clear built-in synergies. Oftentimes, the two organizations don’t just mirror, but rather they complement each other in strategic ways. When they merge, it becomes one plus one equals three.” For example, one hospital may have spent more time developing an urgent care network, a freestanding emergency room, or a micro-hospital network, while the other recruited and invested in developing a network of high-acuity specialists. “Partnering with an organization that has built scalable competencies makes it easier to justify the execution risk of integrating,” adds McDonald.
Key financial benefits
McDonald says decreased overhead is still the most straightforward, nonclinical, financial economy of scale that occurs through provider partnerships. Organizations that enter into a merger or acquisition can expect to gain efficiencies in accounting, human resources, revenue cycle, and supply chain. These deals also allow providers to spread major investments in health information technology and population health over a broader set of hospitals and a larger net revenue base, says McDonald. The two parties also may benefit from clinical core competencies, including complementary service lines and geographic ambulatory access points.
Achieving population health goals through a strategic partnership
When it comes to meeting clinical objectives, quality and population health are top of mind when providers enter into a deal today, says McDonald. In fact, they are looking for specific clinical competencies in a potential partner, including strong case management and physician alignment. They also want a partner with an optimized electronic medical record (EMR) solution. “Simply having an electronic medical record isn’t enough anymore,” says McDonald. “An organization that has mature physician integration, and is advanced in how it uses its EMR system to impact care, likely has physician leaders who have worked through the data sets to create best practices and has clinical care decision matrices embedded in the medical record, which enables greater standardized care.”
Infrastructure and technology make up the backbone of population health. They allow a hospital to measure clinical information and present cohesive and timely data to its clinicians. Both of these competencies require heavy capital investment and know-how, typically found in larger organizations, says McDonald. Community hospitals, however, are challenged when investing in population health because they simply don’t have enough margin. For example, if a community hospital is trying to create a center of excellence in a clinical service line, it may have trouble recruiting key specialists and subspecialists, notes McDonald. This is where merging or partnering makes sense. “A larger partner will have the technology, case management, and a better pipeline of physicians. Our Bank of America Merrill Lynch analysis reflects that there is a correlation between scale (or size) of an organization and higher investment-grade credit ratings.”
Accelerating the shift to MACRA
Finally, a partnership can help physicians meet MACRA requirements, which require transitioning from a fee-for-service to a value-based payment model, says McDonald. A traditional independent physician practice that has to rely on a high volume of patients just to keep the office open does not have a lot of excess capacity to deal with changing payment and care models. “It is an almost impossible task for independent physicians to influence the health of their patients when they leave their office and go to the hospital or to an urgent care center. It requires competencies they don’t have to compete in this advanced care and payment system, including an optimized EMR and the ability to undergo a care redesign,” says McDonald. Therefore, it is difficult to manage downside risk. In a merger or alignment with a larger, capable organization, physicians become part of an entity that has a sophisticated EMR, case managers, and other staff who are available specifically to follow and enhance that patient’s journey across care environments.
To learn more about the benefits of integration and how providers are structuring today's complex M&As, read the full report here.
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