Advancing to Transformative Revenue Cycle

INSIGHTS

1. Effective healthcare systems not only enhances the efficiency and operability of the healthcare organization but also improves revenue, ensures adherence to compliances, and improves patient satisfaction.
2. While organizations should aim to align Financial + Clinical + Operational goals, tying technological advances to it will add significant improvement to the defined revenue goals.
3. The need for digitizing RCM includes changed payment responsibilities, a shift from volume to value-based care, and understanding financial details.

Healthcare organizations require the collaboration of – providers, payers, and beneficiaries (patients) to deliver high-quality and affordable care.Revenue Cycle Management (RCM) caters to the financial flows (across these entities) required to deliver high-quality care throughout the patient’s journey. Today, digital disruption can be seen everywhere because of the shift in payment responsibility, heightened administrative burdens, and regulatory shifts. The changes in payment models towards risk-sharing and VBC models have accelerated the growth of the RCM market, and it is anticipated to reach more than $43 billion by 2022. To be able to ride the wave of the current regulations, providers will have to regroup and review their current business strategy with RCM as a key area for investment on the digital front.

IMPORTANCE OF RCM IN HEALTHCARE ORGANIZATIONS

Revenue Cycle Management is critical for healthcare organizations as it enhances the efficiency and operability of the healthcare organization. Apart from this, there are more reasons why RCM is important. It not just enhances the organization's efficiency but also improves the revenue, ensures adherence to compliances, and improves patient satisfaction. These benefits are crucial for any healthcare organization's growth, leading to healthcare organizations adapting themselves to embrace digitized RCM.

NEED FOR SHIFT TO ‘TRANSFORMATIVE’ AND ‘DIGITIZED’ RCM:

1. Shift in payment responsibility:

Revenue collection has become challenging due to shifting costs. As per a survey, 56% of patients report the reason for the delay in paying medical bills is confusion over their EOB understanding.

Exhibit 1: Growth in CDH accounts

2. Shift from volume to value-based care:

Patients expect 'retail' industry experience in healthcare. This model prioritizes and places the 'patient' at the centre of the care continuum.

3. Hanging financial pressures:

The ‘alphabet soup’ of regulatory forces such as ACO/MACRA/ MIPS/ VBC/ APM’s/ Bundles payment models/ MSSP’s etc. and the impact needs to be understood in detail:

• Even SDoH factors like smoking addiction, has an underlying impact on billing/collections and, thus, the bottom line.
• SDoH risk correlates to no-shows and appointment cancellations and thus lost utilization and missed revenue.

The below exhibit shows the shift from payment reforms to more patient-centric regulations introduced, which acts as a trigger to steadily shift towards next-gen RCM: (Exhibit 2)

Exhibit 2: Shift in regulations

4. Administrative burdens:

AHRQ Studies show that up to 50% of physicians experience some level of burnout. This is adding to staff burnout and, thus, missed $ revenue.

Traditional RCM focus was on capturing revenue which has now shifted to driving revenue. This is achieved through aligning Financial + Clinical + Operational goals and tying technological advances to it.

WHAT IF ORGANIZATIONS DO NOT STEP-AHEAD WITH THE TRANSFORMATIVE MODEL?

Implications

1. Shift in payment responsibility demands more FTEs for patient collection. If not fulfilled, organizations can have a huge negative impact.
2. Shift from volume to value-based care demands more focus on the quality of care.
3. Financial pressures: Providers continue to struggle to receive reimbursement for the services as new regulations (see Exhibit 2) are introduced. Providers need to understand all the concepts like Balance Billing/provide meaningful comparisons prior to receiving care/participate in different care delivery models.
4. Administrative burden: Nursing and staff burnout will directly impact the Quality of care.

Looking at the above factors, the top four industry revenue cycle challenges revolve around optimizing net revenue, reducing cost-to-collect, increase in cash flow, and digitizing patient financial journey.

Across industries, there has been a significant shift towards hyper automation and cognitive solutions. Below steps should define how RCM vendors should take step-by-step process from learner approach to an advanced stage. Below exhibit represents the maturity model for an organization to drive the revenue business goals:

CONCLUSION

Depending on all the above considerations, organizations should be evaluated based on the current state and where they want to move in terms of adopting RCM digital strategy. Across industries, there has been a significant shift toward hyper automation and cognitive solutions. Depending on all the above considerations, organizations should be evaluated based on the current state and future aspirations for adopting RCM digital strategy. 

SUMMARY

Healthcare requires the collaboration of – providers, payers, and the beneficiary (patient) to deliver high-quality and affordable care. Revenue Cycle Management caters to the financial flows across these entities required to deliver high-quality care throughout the patient’s journey.   To be able to ride the wave of the current regulations, providers will have to regroup and review their current business strategy with RCM as a key area for investment on the digital front.