Hospital Revenue Cycle Transformation Needed to Boost Performance

Hospital revenue cycle transformation is needed to elevate poor enterprise performance as a result of the COVID-19 pandemic, experts from healthcare management consulting firm Kaufman Hall reveal in a new report.

Three-quarters of hospital and health system leaders surveyed by the firm said their organization experienced “adverse revenue cycle impacts” during the pandemic, including a higher percentage of Medicaid patients (34 percent of respondents) and increased rates of denials (33 percent).

Many hospitals also saw other changes in payer mix, with 29 percent of respondents reporting a lower percentage of commercially insured patients and 22 percent reporting a higher percentage of self-pay or uninsured patients. About 27 percent of hospital leaders also reported an increase in bad debt or uncompensated care over the past year.

Not all the adverse revenue cycle impacts are a direct result of the pandemic. Increased denial rates, for example, stemmed from payer policy, such as new site of care restrictions and a general lack of understanding of the provider side of care.

However, hospitals and health systems will need to address revenue cycle challenges to elevate poor performance during the pandemic, authors of the report indicated.

“Building a cross-functional team to link authorizations, providers, case management, clinical documentation improvement, and clinical denial appeals will help your organization quickly identify denial trends, determine root causes, and develop solutions to reduce these denials,” they wrote.

In conjunction with this integrated clinical denial management model, hospital leaders should also focus more on real-time monitoring of initial denials to identify root causes and changes and become more proactive at addressing the denials.

The authors of the report also advised hospitals and health systems to consider outsourcing and reconsider their revenue cycle vendors.

“All employers, including vendors, are facing challenges in attracting and retaining staff,” the report stated. “Make sure your facility is receiving the attention and dedication it deserves by evaluating vendor performance, productivity, and effectiveness more regularly. Also validate that the vendor is continuing to prioritize staffing resources to provide committed levels of services and support.”

Revenue cycle outsourcing may be a solution for some hospitals, which are also facing their own issues with the workforce. Outsourcing even a segment of revenue cycle management, such as receivables, can help hospitals to elevate performance while addressing their top underperforming segments, the authors explained.

But hospital and health system leaders do not anticipate more revenue cycle outsourcing, at least in light of COVID-19’s impact on the labor market. Most respondents (70 percent) said their organization is not more likely to use outsourced revenue cycle services because of the impact, while 16 percent were unsure and just 14 percent said their organization was more likely to use the services.

Leaders were primarily concerned with the community’s response to revenue cycle outsourcing. Respondents said patients want local engagement and ownership.

Despite this viewpoint, 92 percent of leaders said their organization is facing challenges attracting and retaining support staff. Consequently, most hospitals and health systems are increasing base salaries (88 percent) and offering signing bonuses (68 percent), while more than half (58 percent) are paying more for overtime.

At a time when expenses are up for hospitals and health systems, “outsourcing, automation, and offshoring offer some of the most promising solutions to reducing corporate overhead and shared services costs,” the report said.

“This is not without risk, and may require retraining programs for displaced employees, or having an onshore backup for offshored programs, but it is exactly what many U.S. corporations have done to contain their costs,” it continued.