The long-awaited debut of 2021 has come and gone. And while many physician practices are ready for a fresh start, the reality is that the unprecedented financial challenges of 2020 will have a lingering impact.
One mid-year 2020 study from the American Medical Association found that the average drop in revenue experienced by providers amid the pandemic was 32%. As practices kicked off the new year, many are operating within razor-thin margins and must implement strategies and processes that ensure no reimbursement dollars are left on the table. In addition, the evolution of value-based care will continue to expand as payers increasingly focus on more holistic, preventive approaches to care.
As providers face the opportunities and challenges ahead and 2021, a holistic approach to revenue cycle management (RCM) will be paramount to success and sustainability. Here are five trends that will impact how medical practice executives manage their businesses in the coming year.
Trend #1: Virtualization changes the work landscape.
The introduction of COVID-19 demanded that physician practices quickly mobilize virtual workforces for safety and business continuity reasons. Now that the work-from-home door has been opened, many provider groups may find that it is difficult to close it from both an employee and patient perspective. Virtualization stands to impact the ability to recruit and retain employees, and the availability of telehealth options will likely be a factor in patient experience and engagement going forward. Consequently, practices will need to align RCM strategies with these trends and gain transparency into remote workflows. For example, workflow automation tools can help administrative teams manage productivity, hold billing staff accountable and make the best use of resources and time to optimally managing financial health and ensure proper cash flow.
Trend #2: Tighter margins drive greater need for real-time data insights.
Physician practices coming out of a difficult 2020 are now in the throes of “deductible season,” a time when patients are more hesitant to schedule elective surgeries and outpatient visits. Add the ongoing safety concerns of COVID-19 to the mix, and there is good reason for providers to have angst about the Q1 2021 financial outlook. To ensure a healthy bottom line, administrative teams will need to extract deeper insights from their data to inform financial forecasting. They will also need to retire manual data mining techniques that draw needlessly on resources and do not produce timely actionable insights. Advanced analytics tools can instantly differentiate between total A/R and the actual value—including denials, past due patient balances, claims that have yet to be filed, and partial pays. They can help identify new cash opportunities, root cause issues and measure effectiveness of process changes.
Trend #3: Front-end financial clearance takes center stage.
Tight operational margins and increased bad debt do not work well together. Today’s physician groups face mounting pressures with bad debt due to the challenge of collecting patient-responsible balances amid growth of high deductible health plans. Achieving financial clearance, or pre-registration payments, will become essential in 2021 as practices try to recoup losses from the previous year, and future sustainability will hinge on the ability to capture all revenue sources. While patient care is the number one priority, providers must commit to requiring that missed payments are reconciled before a patient can schedule a new appointment. This is another area where analytics and automation can improve RCM processes by helping administrators identify the number self-pay patients scheduled in a month and prioritize collections up front through dashboards and reminders.
Trend #4: Reducing administrative burden is critical to strategy.
In recent years, the healthcare industry at large has taken steps to reduce provider administrative burden. Streamlining revenue cycle efficiencies while maintaining a lean organization is central to these trends. Whether it’s drawing on the promise of automation and artificial intelligence to prioritize workflows around the greatest return on investment or turning to a third-party RCM expert, practices will be seeking out the most efficient approach to a healthy bottom line. Outsourcing to expert billing partners will become increasingly attractive to address growing complexities with claims processes, especially for practices in rural areas where access to skilled RCM staff is at a premium.
Trend #5: Patients will continue to demand better financial experiences.
Patient experience is a common healthcare buzzword, and few experiences have more influence on positive or negative results than those involving the patient’s bank account. In a recent TransUnion Healthcare survey, 62% of patients said knowing their out-of-pocket expenses in advance of service impacts their likelihood of pursuing care. Patients want transparency into price; they want to clearly understand their benefits upfront and what they will be responsible for covering. In addition, they want flexibility in how they pay—whether digitally via a device, in-person or by mail. Practices will continue to invest in tools that equip billing staff with the knowledge for addressing these needs and better engage patient directly.
The healthcare industry learned a lot about its financial weaknesses and strengths in 2020. Heading into 2021, providers can now learn from previous shortfalls and implement the tools and strategies that will best position them for a sustainable future. In doing so, the industry can hopefully round out this year on a much better financial note.