How do health systems evaluate mission-critical tech in RCM efforts?
There are numerous rev tech solutions in the marketplace and just as many vendors. With financial pressures from inflation and poor payer rates, revenue cycle leaders and CFOs are examining digital transformation initiatives to level up their financial wellbeing.
Miguel Vigo is the chief revenue officer at UC San Diego Health, and he shared the significant improvement he saw in his organization after using an RCM assessment tool. Vigo spoke about how his health system was still able to implement the benchmarks from the tool without having to stray away from their original plans.
“We didn’t want to stray away from our strategy road map, but worked to be able to see more through it,” Vigo said.
What’s The Strategy?
Revenue cycle leaders and CFOs should examine where even their organization’s smallest challenges lie in order to move towards improvements. Financial leaders should ask themselves what adjustments can be made to their system’s most valuable, mission-critical areas. What adjustments will have the most positive impact for the organization?
By focusing on realigning resources to the most valuable and critical parts of the organization, financial leaders can create a straightforward map towards solutions to their biggest challenges.
“[...] we have either improved our metrics considerably which has had a massive value gain, or we have clear transparency on stabilized KPI’s/metrics (within good ranges),” Vigo said.
“To which we have pivoted resources and realigned strategies given those are now in a more protected and steadied state.”
A discussion panel at the HFMA conference highlighted the Revenue Cycle Management Technology Adoption Model as one option that can help point health systems in the right direction on the RCM path. The free benchmarking assessment tool is a product of the collaborative effort of FinThrive and HFMA, identifying the wins and shortfalls in RCM performance and providing custom KPIs measured against industry benchmarks.
Out of the five stages of adoption that the tool uses, Vigo saw his health system was at stage four, meaning the system was doing well in some areas, and needed work on others. “We wanted to put all our cards on the table, and my team stepped up to do that,” Vigo said
Vigo said that one of the best parts of going through this process to improve technology outcomes was how it brought his team together. Everyone had to come together to evaluate the areas they could do better in, and this model gave them a guidebook.
Seeing Results
With meticulous tracking, UC San Diego was able to tackle its biggest challenges throughout the year. A couple areas where UCSD saw the most improvement after using the tool were point of service collections and clean claims rates. According to Vigo the system’s point of service collections increased by over $2 million dollars in a single year.
Prior to RCMTAM, UCSD’s point of service collections percentage of net patient service revenue stood at 0.8%. Afterwards, it increased to 1.1%. UCSD’s clean claims rate also jumped, going from 93% to 97.6%.
What's in the foundation of a strong CFO-CIO dynamic?
When the CFO and CIO can work together without friction, health systems reap the benefits of financially sound innovation.
Numerous issues prevail in today’s healthcare climate, from high costs due to inflation and labor expenses, to physician and nurse burnout due to outdated technology. There are countless challenges that call for CFO and CIO collaboration, but what do both parties need to understand for the relationship to be successful?
The HFMA conference this year highlighted the importance of this collaboration. One CFO described the dynamic as “putting the innovation where it makes sense.”
Andy Adams of Nordic Consulting moderated this discussion at HFMA and notes the value for a health system when a good CFO-CIO relationship is nurtured. “A tightly connected CFO-CIO duo can drive the innovation agenda and work together to manage, evaluate and stage projects and investments across all aspects of healthcare delivery,” Adams summarized in a LinkedIn post.
When both parties focus on understanding the initiative purpose and expected outcomes, they can ensure they are working from the same playbook.
A good CFO-CIO collaboration needs:
Balanced reporting structure steeped in trust.
CIOs must have an understanding of finance, as well as how to examine value versus cost.
CFOs must understand the value of IT: Great CFOs know how to communicate the IT value story.
Shared language: Ensure common business definitions over common data definitions when diving into analytics.
Create an investment model to represent the impact of digital transformation—agree on cost, value, and acceptable risk level.
CMS' OPPS proposed rule checks some boxes for hospitals, but misses the mark for others.
On July 10, CMS released its OPPS proposed rule for 2025, and on par with previous reactions, it’s been met with mixed feelings.
CMS has proposed an increase of 2.6% for outpatient payments for hospitals next year, which would raise rates for roughly 3,500 hospitals and 6,100 ASCs in 2025. This rate is based on the projected hospital market basket increase of 3%, factoring in a 0.4% point for productivity adjustment.
The rule would increase hospital payments by $2.9 billion, plus a proposed $560 million increase in disproportionate share hospital payments and proposed $94 million increase in new medical technology payments.
Although these are substantial numbers, it’s a drop in the bucket compared to rising inflation and labor costs. On top of this, the proposed rule would bring several service and reporting adjustments that hospital CFOs will have to contend with.
CFOs have a cost battle ahead, so let’s examine what’s in store.
CFO Gameplan
While this year started with an optimistic outlook for hospitals, between labor costs and inflation, rising costs continue to be an issue. CFOs will need to strategize where they can, examining alternative revenue paths that fit with their organization.
As discussed by CFOs at this year’s HFMA conference, a focus on implementing AI automation and tech investments in revenue cycle could potentially help. CFOs can look to invest in automation to stay on top of administration burden costs and data reporting under the proposed rule. CFOs can also look to growth opportunities in outpatient services including joint ventures to examine sustainable and profitable expansion avenues.
The AHA reliably hit back at CMS for the proposed rule, once again referring to the new rate as “woefully inadequate.”
In a media statement, AHA’s senior vice president for public policy analysis and development, Ashley Thompson said, “CMS has yet again proposed an inadequate update to hospital payments.”
Thompson also went on to address the financial risk for hospitals under the proposed rule.
“This proposed increase for outpatient hospital services of only 2.6% comes despite the fact that many hospitals across the country continue to operate on negative or very thin margins that make providing care and investing in their workforce very challenging,” Thompson said.
The Big Changes
So, let’s take a look at what these proposed changes would mean, if finalized, and how CFOs can prepare for the challenges ahead.
Remote and Telehealth Payment Alignment:
Seeking to closer align hospital payments for remote care and telehealth services, the agency’s rule would bill mental health care, outpatient therapy, diabetes management training and medical nutrition therapy services provided by hospitals to patients in their homes all under the physician fee schedule.
Rural Emergency Hospitals:
For rural emergency hospitals there are several new measures that focus on health equity and the screening for social drivers of health. Beginning in 2025, the REH reporting period for hospital visits within seven days after hospital outpatient surgery measure would be extended from one year to two years. On top of this, all REHs would be required to report their data under the REHQR program.
Reporting:
The proposed rule would also change aspects of the hospital outpatient quality reporting program, including a greater focus on health equity measure and removing the MRI lumbar spine for low back pain measure in 2025.
Voluntary reporting, a measure hospitals favor, will be upheld for core clinical data elements and linking variables for both the hybrid hospital-wide readmission and hybrid hospital-wide standardized mortality measures from 2023. This will affect payment determination for the hospital inpatient quality reporting program in 2026.
Hospital CFOs will need to ensure their organizations meet these requirements in order to receive full payments under this program.
Medicare Rates:
Lastly, the proposed rule would update Medicare payment rates for intensive outpatient program services provided in hospital outpatient departments, as well as for partial hospitalization. While the existing program structures would stay in place, CMS would use claims data from 2023 and updated cost data from reports conducted three fiscal years prior.
Public comments on the proposed rule are being sought through Sept. 9 and CMS will issue the final rule by early November.
Top finance executives share their tips on how to succeed in today's volatile healthcare economy.
CFOs have a lot to battle with in today's healthcare financial climate. The HFMA conference brought many CFO ideas together and gave insight into the their most prevalent and taxing issues. We’ve narrowed down the best tips for CFOs from the conference.
Value Based Care: Value based care won’t happen overnight, CFOs need to ensure they are patient and diligent around implementation of these models. Health systems should examine any and all options to stay on top of the national payers, including joint ventures to expand areas of care.
To Not Worry:
Market Disruptors: Market disruptors are coming and going at a fast pace, from Walmart to Amazon, everyone is seeking the lucrative aspect of healthcare. But as discussed by CFOs at HFMA, these disruptors don’t seem to understand the healthcare economy and are often stepping back. What these disruptors don’t understand is that primary care economics do not work on their own, and there must be a connection to the payer side or value-based play in order to be profitable. CFOs at the conference were not so concerned here.
Artificial Intelligence: The governance of AI and how smaller organizations are having trouble implementing it are top concerns here. An ‘automation roadmap’ is an important aspect that should not be overlooked. AI implementation is a process that needs to be taken slow with the right type of governance in order to do it successfully.
Big Pharma: Hospitals and health systems face a great financial burden as drug companies increase prices. There is an important need for health systems to push back against big pharma lobbying efforts, as well coming together to speak with one voice.
Payers: Payer denials are increasing rapidly and hurting health systems everywhere. CFOs at HFMA discussed the importance of strong tactics like implementing weekly payer meetings and putting an emphasis on strict documentation.
Are CFOs making the right investments to solve their organization's issues?
Between an uptick in cybersecurity threats and piling workforce management woes, CFOs are searching for solutions. Montefiore CFO Colleen Blye recently spoke to HealthLeaders, sharing insights on these issues and how her organization is working to get ahead.
Blye took the role of executive vice president and CFO for the New York-based health system in 2016. Recently, she also added chief business officer to her title, taking on the business operations side of her organization as well. See our coverage of her new role in this previous article.
Blye’s top concerns as she progresses in her new role are where to make the best digital investments, and how to approach labor management.
Digital Services
Blye has digital services on her radar, understanding how Montefiore’s digital presence meets patients where they are. Digital communication is vital for patients and has become a critical element of their overall experience.
“That means we need to make it easy for them to find us and access their information online, and we need to provide this information in ways that best suit their communication preference,” Blye said.
As cybersecurity attacks persist across health systems, Blye ensures digital service investments are also top of mind.
“Digital services investments are always anchored in our responsibility to protect patient information and our commitment to ensuring safety protocols. Cybersecurity safeguards are always maintained to protect our patients' privacy,” she said.
Labor Management
Health systems across the country have been grappling with labor shortages and costs. One study notes that labor costs were starting to eat into hospital’s Q1 profits. What can a CFO do? Access to strong real time data plays into the equation here, according to Blye.
“Labor management is at the forefront of our stewardship focus,” she said. “One of the keys is a daily focus of a multi-disciplinary team consisting of operations, nursing, human resources, and finance. We are focused on making certain that real time actionable data is available to those making key staffing decisions.”
An additional aspect of labor management, Blye notes, is continuous investment for needed resources.
“We are equally focused on making certain that we are investing in a continuous pipeline and access to needed resources, as well as training and retaining our labor force.”
Value-based care looks promising, some market disruptors not so much.
At the HFMA conference this year CFOs dove into some of their top concerns and gave insight on areas where they are less concerned. Value-based care is a term that’s been thrown around healthcare for a while, with some health systems being more concerned about implementing this model than others. CFOs assured attendees at HFMA that a value-based care model is important, but that doesn’t mean it's easy.
Value-Based Care, Not For The Faint Of Heart
Value-based care is a sector it seems every CFO hopes to become more involved in. Michael Allen, chief financial officer at OSF Healthcare System spoke about their organization’s costs climbing up 15% over two years, and how they had trouble dealing with this, citing data access challenges in the mix as well. He also spoke about their struggles finding the right payer partners to create an incentive system that is transparent, and also incentivizes both parties to win together.
“It’s hard if you can’t get a transparent partner,” said Michael Allen.
Damschroder stated that health systems looking to shift to value based care must be ready to weather the storm, and examine the cost to scale.
“You can’t be in it for a year or two and think you’re going to turn it around,” he said.
Health systems should examine any and all options to stay on top of the national payers, including joint ventures to expand areas of care.
“I’d say it’s the least transparent place where commercial insurers are,” Damschroder said.
Are Disruptors Actually Disrupting?
Next, the discussion turned to CFO’s perception of market disruptors like Walmart and Amazon. Despite their moniker, there doesn’t seem to be much cause for concern.
While companies like Walmart and Amazon have the chance to disrupt and destabilize parts of the healthcare sector, they don’t seem to be in it for the long haul.
“Primary care economics don’t work on their own. You have to either be connected on the payer’s side in a value-base play, or you have to be able to make some money off it in another way,” Allen said.
“That’s why none of these are working. The private equity play into medical groups isn’t working.”
Damschroder emphasized that these companies are only in the business to make money, adding “When the risk gets too big, there’s not the same responsibility.”
Cook brought up her organization’s effort to push an on-demand virtual care visit option to offset Amazon’s offering and how it wasn’t received well, citing very low visits.
From tech innovation to sustainability wins, how one health system does it.
For Allina Health’s new CFO Doug Watson, there are two things at his health system that are making big strides. In a previous interview with HealthLeaders, Watson shared the main pain points he is facing in his organization, discussing labor expenses and his thoughts on how to make the patient experience a “friction-less” one. Now we’re talking wins, and how Watson’s health system puts their best foot forward.
Smaller Environmental Footprint = Smaller Costs
Outside of Watson’s new role, Allina Health recently made headlines for two other initiatives: an environmental sustainability award and a mobile app for breast cancer patients.
There are numerous benefits for health systems who accel sustainability efforts, from avoiding medical waste disposal fines to cutting costs, to having a positive impact on the surrounding community. At Allina, these benefits are not overlooked.
In May, Allina Health was awarded the 2024 System for Change Award by Practice Greenhealth for the second consecutive year, one of many awards held by Allina for its sustainability efforts. Watson points out that striving for sustainability is a win-win for health systems: sustainable practices equates to cost savings.
“We take our social responsibility very seriously,” Watson said. “If we can produce things more efficiently and more effectively with the same amount of resources, then it's a win both economically and environmentally.”
Tech Innovation
Cancer Connection is Allina’s new mobile app that provides breast cancer patients with accessible information to navigate their diagnosis and have control over their treatment, this is one of four apps that Allina offers to their patients. The app features a learning library, a customizable to-do list, and features to help patients prepare for appointments.
New tech like AI and automation have made huge strides in helping burned out medical staff; the reported burnout rate amongst healthcare workers was nearing 50% last year.
Watson spoke about the opportunities for healthcare to advance innovative tech not only to tackle hefty medical costs, but to significantly improve clinician’s quality of life.
“I think there's a huge opportunity as we start to think about how to get technology and use it to either take friction out, or to help our clinicians be able to be more effective, work more at the top of their individual license, and also hopefully improve quality of life for them,” Watson said. “Then they can do what they got into health care for to begin with, which is to be connected to the patient.”
Allina isn’t new to the health tech game, and Watson shared his intentions to keep the innovation wheel spinning to improve patient care.
How should CFOs strategize when it comes to payer denials?
The increase in payer denials brought a lot of heat at HFMA this year. From CFOs, to RCM to VPs of payer strategy, everyone had a tip or a strategy for dealing with payers.
The numbers don’t lie, studies show that prior authorization and denials saw a 67% increase in 2022. Another study cited that denials were up again to 11.99% in the first three quarters of 2023.
What can health systems do to work towards a better denial rate and a better relationship with their payers?
Top tips from the executives:
Set the tone: Ensure to set the tone of negotiations and meetings from the start of payer interactions. Make the payer understand why they are a good partner or not. Don’t be afraid to say: “We’re content going out of network if we need to.”
Analyze parity: Look at internal parity and how your organization’s payers compare to other payers. Be sure to understand where your organization currently stands, and where it’s going.
Over-prepare: Prepare your organization up front, even up to the board. Be transparent about challenges in managed care, and look at ways to file litigation if necessary. Customize communications according to the audience and patients.
Key Strategies:
Apply pressure: Don’t accept poor performance for inadequate rates
Drive the narrative: Reinforce the need for partnership, patient care over profits
No Delegating: Payers try to siphon off leadership tasks to minimize their input. Don't let that happen.
Stay the course: Be patient
Review deliverables: Hold them accountable. No two negotiations are the same.
Consider creating a national payer scorecard: Keep track of the reputations, strategies and tactics of every payer your organization does business with.
"We are not going to leave dollars on the table," CFOs say.
During a panel at last week’s HFMA Annual Conference in Las Vegas, CFOs discussed pain points they’re currently facing and emerging opportunities.
Topics ranged from action plans for addressing industry challenges to examining current financial trends that are impacting healthcare, but there were three specific areas where CFOs seem to be placing their focus.
Artificial Intelligence
One of the first trends spoken about was the implementation of artificial intelligence. CFOs voiced concerns about the governance of AI and how smaller organizations are having trouble implementing it. Some brought up the need for an ‘automation road map’ to serve as a guide, and the importance of a such a plan for every health system.
“We’re starting to dip our toes in, but it’s a slow process,” said Jana Cook, CFO of Phelps Health.
Perhaps this is something that every leader should keep in mind. The consensus was that AI implementation is a process that needs to be taken slow with the right type of governance in order to do it successfully.
Big Pharma
Big pharma’s impact on health systems was the next topic of conversation, with panelists and attendees discussing the 340B drug pricing program and the significance of improving the cost of pharmaceuticals.
“Pharma and the health plans are winning right now,” Robin Damschroder, executive VP and CFO of Henry Ford Health System said. “They’re winning in the battle of who is doing better in the community.”
Hospitals and health systems face a great financial burden as drug companies increase prices.
While drug manufacturers are trying to lobby against the program, Damschroder stressed the need for health systems to push back against big pharma efforts and the importance of coming together to speak with one voice.
In order to do that, Damschroder said, it will take a collaboration of colleagues at the individual professional associations within the different physician specialties to come together.
Payer Pains and Denials
Commercial payer denials are coming in at an alarming rate for many health systems. One study cited that commercial payer denials for inpatient and outpatient services increased to 15.1% in 2023, compared with 3.9% for Medicare in the first quarter.
One of the biggest changes the group spoke about was going from commercial pay to government pay. One CFO discussed the how their organization dealt with denials by implementing weekly payer meetings and putting an emphasis on documentation coding, calling it “long, hard, steady work.”
The HFMA Annual Conference tackled all things finance this year, but one area that seemed to dominate discussions? The revenue cycle. From payer woes to strategy improvement, here are a few key trends that were top of mind at the event.
Payers Aren’t Playing Nice
No big surprise here: payers are playing by their own rule book.
Almost every discussion at HFMA this year mentioned payers in some capacity. That’s because they’re causing more issues for health systems than ever before. Denial rates have been increasing year over year, and reimbursement can take up to three months or longer.
Heavily capitalized payers are becoming more and more common, and they’re often playing hard with health systems, from using AI to inaccurately automate denials to bringing reimbursement to a stand-still.
Several sessions spoke about the importance of partnering with the right payers and emphasized the importance of transparency in these partnerships.
Executive leaders said don’t be afraid to go out of network and use other hard ball tactics to push back on payers.
You need systemwide revenue cycle participation
With revenue cycle management being a major topic this year, executives shared what is working at their health systems.
One session discussed the importance of the relationship between CFOs and the revenue cycle team.
There must be a certain level of trust in this relationship in order for both departments to thrive. CFOs should not have to micromanage the revenue cycle but should be there for guidance and eliminating barriers.
One session discussed the concept of physicians being more involved in revenue cycle decisions. Afterall, physicians are the ones with the medical degree and are the ones experiencing the operational issues firsthand in their work.
RCM has a lot of room for improvement, and hope is not a strategy
Just about everyone thinks they have the solution to revenue cycle problems.
The reality is there is no one size fits all solution and executives will have to examine the specific needs of their organization to identify opportunities for improvement.
Often, health systems rely on dozens of vendor support to manage their revenue cycle. One study presented at a session cited that the average health system uses about 40 vendors to support RCM efforts.
There’s a number of solutions and support out there, but finding the right one will take meticulous tracking of revenue cycle. “Hope is not a strategy,” said one CFO during a session.
A few leaders shared their insights on where they think the revenue cycle may be five years from now, saying that the department will likely be far more automated. But leaders warned to not get too carried away.
Standard processes shouldn’t be automated, many said. Revenue cycle teams should look towards investing in the right technology to improve RCM efforts and ensure that the technology benefits the specific mission-critical components of their organization.
