From the Hayes Healthcare Leaders Blog Series (@HayesManagement)
By Steven M. Wagner, PH.D., M.P.A.
Healthcare leaders need to look at the bigger picture of healthcare reform rather than narrowly focusing on its separate components. Fragmented legislation and grants led us to where the healthcare industry stands today, and only integrating networks of components in healthcare can lead us to successful reform. Success means that healthcare becomes accessible and affordable with or without insurance to all payors, quality outcomes take into account the functional and holistic health of the patient, and patients are satisfied and feeling well.
The hard reality is that in the end, everyone in the industry will be dealing with less revenue because the over-arching goal for the US government is cost containment. Only when leaders take all the changes into account will we, as an industry, be able to facilitate truly beneficial change. To make that happen, revenue cycle leaders need to be able to integrate cost, quality, and access into our routine processes of patient care, frequently analyze outcomes including the patients’ self-perceived health statuses, and develop actionable solutions.
From the revenue cycle to the revenue stream
In today’s health reform environment, we should be talking more in terms of the revenue stream rather than revenue cycle. Managing the revenue stream requires training our revenue cycle leaders in a new and different way. An organization may meet the “metrics” of accounts receivable management (AR) such as AR days, aging of AR, bad debt percentage of charges, credit balance management, and size of the recorded revenue, but still fail at overall healthcare reform. Ultimately, this will lead to a decline in sustainability in all practices.
Healthcare reform has changed most processes for revenue cycle managers. Frequently, revenue cycle managers consult with executive leadership to obtain appropriate responses to changes in reimbursement. MACRA – the all-encompassing reimbursement formula Congress expected to replace the former Sustainable Growth Rate formula Congress legislated in 1997 – represents the key performance metric in revenue terms that dictates the major income for most healthcare institutions, especially physician services. If MACRA fails to produce projected savings in Medicare reimbursement over the next 10 years, accounting for budget inflation and increased entitlement population, a revised SGR formula is subject to re-implementation.
To ensure this does not happen, revenue cycle leaders must implement changes now to embrace quality outcomes and patient satisfaction while ensuring their institutions’ highest reimbursement capabilities. The current educational system for training near-future revenue cycle leaders is sorely lacking. Changes are needed to enable them to influence the behavior of physicians, administrators, and patients.
Upgrading the revenue cycle education program
The curriculum for healthcare administration in both bachelor and masters degree programs covers basics from texts written from 2010 to 2013. The major changes in MACRA affecting close to 75% of Medicare reimbursement to hospitals and physicians were not even being considered until 2014. Many of the students I teach have no exposure to health insurance coverage much less what is needed for life stage changes such as unemployment, divorce, child health, newborn care, and retirement. They fail to understand that insurance is NOT the panacea for healthcare access.
Furthermore, the thousands of healthcare administration students whom I teach are healthcare professionals: nurses, therapists, medical students, and a variety of practitioners. In all my courses, there has been only one revenue cycle manager. Hopefully there are many more at the numerous other institutions where people seek healthcare administration as a profession. My fear is that few institutions teach the future state of healthcare reform or challenge these students to think critically about the importance of balancing income and expense with quality of care, patient satisfaction, and the work values established for providers. All are equally critical.
To enable revenue cycle leaders to achieve success in these changing times, three key factors need to be in place: a comprehensive educational foundation, extensive hands-on experience, and a collaborative skill set.
- Fortifying the educational foundation – Competencies accrue to the student and ultimately to the healthcare profession through education and experience, but the education must establish the foundation of values necessary to bring about reform and achieve successful outcomes.Solidifying the revenue cycle educational foundation, despite political claims to the contrary, remains a key factor to help future leaders understand the extent to which patient care constitutes value for quality. At the beginning of healthcare reform in 2010, the concept of value and quality outcomes remained elementary and superficial. They have become more complex as the Centers for Medicare and Medicaid Services (CMS) and commercial managed care organizations developed complex informatics to measure desired medical outcomes based on patient risk factors.
Revenue cycle executives familiar with risk measurement correlated to reimbursement have the competency and ability to plan for the highest strength of the practice or hospital. Problems that arise in reimbursement are often not the result of lack of education by clinical practitioners but instead are caused by documentation issues. The revenue cycle leader needs to be able to clearly communicate these issues to inform without condescension to help improve understanding and collaborate with providers to resolve the problems.
Education must also provide the formulae for risk stratification in various cases. This can be accomplished through use of real time examples of strategic leadership by healthcare administrators and revenue cycle managers during times of change. Leadership learning alone, without education on risk stratification and assessment, is not sufficient.
- Gaining hands-on experience – Driving successful healthcare reform while becoming competent in revenue cycle, risk assessment, evaluation, and measurement with obstacle review requires experience in the trenches. The ideal way to grow this competency is through use of internships. Internship development (or residency) in real-time successful organizations with a developed leadership team and veteran revenue cycle management is a key to fundamental and sustainable success.A clear example comes from a large academic health center on the east coast. The organization provides an evolving management development program with hands-on learning in leadership and project management to students from the affiliated university. Both undergraduate and graduate students study data from revenue cycle and other operational areas to develop a project for performance improvement. Completing or implementing the model is a requirement for graduation. Consequently, this successful institution hires many program students as projects are implemented and outcomes are measured over the long term.
While this apprentice management and leadership incubator model exists in higher education institutions for healthcare administration training, there is no such program available for the complex revenue cycle role. We must adapt similar apprentice programs to properly train our revenue cycle leaders and expose them to the real world challenges they will face.
- Developing a collaborative skill set – As healthcare reform evolves, future revenue cycle leaders will need to effectively collaborate with other internal and external entities. Negotiating with Managed Care Organizations (MCO) or participating in Accountable Care Organization (ACO) requires clear and direct experience for revenue cycle management in institutional strategic and financial goals. Being able to effectively satisfy the needs of both the MCO and the institution requires clear and honest discussions to establish mutually agreed measureable targets synchronized to time of service.The revenue cycle leader must understand and be able to communicate that reaching revenue cycle goals is beneficial to both the institution and the MCO. That type of cooperative interaction will lead to improved, more successful ACOs. Collaboration skills that integrate the needs of both payor and payee increase profit for both. As a result, each “partner” in the process must know and be willing to openly share their costs and profit margins to reach mutually beneficial goals.
Conclusion
Reimbursement models are shifting from fee-for-service to value-based care adding a challenging new dimension to the healthcare revenue cycle. As the revenue cycle evolves, the changes will continue to proliferate, requiring that revenue cycle leaders evolve along with them. This can only be accomplished through comprehensive education, hands-on experience during and post education, and use of collaboration skill sets.
These crucial building blocks are currently not available at many academic institutions or even at medical schools, so establishing the necessary competencies continues to be difficult. This doesn’t mean future revenue cycle managers are doomed to fail. Many managers are able to effectively learn, communicate, and collaborate while on the job. However, long-term sustainability and success for these future leaders requires the basic education, skill development, and contemporary experiences that will embed the potential for success right from the starting line.
This article was originally published on Hayes Management Consulting and is republished here with permission.