Repairing the Cracks in Your Financial Foundation

By Venkat Sharma, Founder and CEO, iHealth Innovations
Twitter: @RevenueSherpa

What’s wrong? Where does it hurt? These are the basic questions providers ask their patients to begin the process of diagnosing a problem and determining a course of treatment that optimizes the outcome. They’re also the kinds of questions we at iHealth use to open a dialog with a potential revenue cycle performance customer.

You see, the infrastructure of healthcare practices, clinics and health systems is much the same as patients. It’s the foundation for good health — in this case, good financial and operational health. Especially in an era of rapid change and a dizzying mixture of regulation and competition, providers must carefully consider those questions to determine where inefficiencies are occurring that can plague their profitability and sustainability. Only through that thoughtful diagnostic process can providers implement changes that maximize time, staff and other resources so they can operate at peak efficiency and achieve desired results today and in the future.

As clinical, financial and satisfaction outcomes — the Triple Aim of healthcare goals — become increasingly intertwined within payment methodologies, providers are coming to learn that the old ways of operating a successful healthcare business must evolve to keep pace. The challenge is, physicians went to medical school to care for patients, not business school to manage a company; they and their staff don’t typically have the time and deep knowledge needed to focus on new requirements that will keep their doors open and their business successful.

This is particularly true now that the Quality Payment Program (QPP) transition year began Jan. 1 under MACRA, the Medicare Access & CHIP Reauthorization Act of 2015. Whether providers choose the MACRA payment track called MIPS, the Merit-based Incentive Payment System, or Advanced Alternative Payment Models (APMs), it’s going to change how physicians and other eligible clinicians will be evaluated and paid for keeping patients healthier.

As a provider, the impact won’t hit your bottom line until 2019, so why take action now? It’s important in 2017 because the data and outcomes tracked and achieved this year will determine whether you’re paid more, through incentive payments, or less, due to penalties, just two short years from now. (See board advisor Justin Barnes’ insightful MACRA blogs below.) This new payment model begins with Medicare so will initially affect providers to varying degrees however, as usual, private payers are expected to follow suit with similar programs.

So while 2019 may seem a long way away, it’s not. Regardless of how Medicare and private-payer regulations continue to evolve, it’s clear what practices do today can quickly grow, erode or even eliminate an often narrow bottom line.

In survey after survey, providers admit they’re not ready. In a recent study by Healthcare Informatics magazine and SERMO, 70 percent of the more than 2,000 U.S. physicians across various specialties surveyed reported that they either need help or aren’t prepared at all to face changing business models under MACRA. They often don’t have a solid strategy and confirm that they lack the resources to make it happen. HI Editor-in-Chief Mark Hagland concluded that in this critical juncture for healthcare providers, “many physicians — especially in smaller practices — remain woefully unprepared.”

Fixing the Foundation
So what steps can be taken take now to prepare for this evolution? First, as in building a house, a practice’s financial foundation must be rock solid. And let’s face it…every healthcare organization has its quirks and standard operating procedures that can either strengthen or erode their bottom line and crack the foundation of their practice’s financial stability in the face of constant change.

Worse, you place your financial success in the hands of only a handful of persons, sometimes only one. This in-house staff may have done a great job for decades, but they are subject to illness, vacations, and retirement. Plus it’s frankly just hard to keep up with the latest nuances of each payer when the billing team is working at full speed just to serve your existing patient load and get through the workday.

So even with a stable and experienced billing, coding and credentialing person or team, it’s a lot to be prepared to handle in-house, or with a small “mom-and-pop” billing company. Whatever your team’s size and capabilities, it can always benefit from expert help that’s laser focused on the latest industry changes as these game-changers are considered and implemented.

Most providers admit they don’t believe their current systems, people and processes are sufficient to the task. In September 2016, Black Book released a report of end-to-end revenue cycle management solutions showing that a full 85 percent of provider organizations surveyed are in revenue cycle management (RCM) replacement mode, and 70 percent are considering outsourcing or co-sourcing their revenue cycle operations. 94 percent of chief financial officers believe transformed revenue cycle processes will enable them to become more efficient and positively impact their organization’s financial health, though half worry their budgets won’t allow them to afford the comprehensive solutions they need. Others cite concerns about protecting valued, long-time staff in the process.

But many who’ve taken the plunge say it’s working…and working well.

Analyzing the Black Book report, Becker’s Healthcare noted that 82 percent of practices and ambulatory clinics outsourcing or co-sourcing their revenue cycle services since fall 2015 have reported decreased number of rejected claims and reduced time in receiving payments from payers. The challenge of recruiting and retaining skilled business staff reported by 97 percent of independent group and solo practices — so damaging to an already fragile claim-management process — almost immediately “fell off of the radar” of concerns for most providers after outsourcing their billing. Fortunately, many practices retain their valued staff members by retraining and focusing their roles toward more revenue-generating activities.

Black Book also reports that more tech-savvy and cost-conscious physicians now graduating from medical school are looking at outsourcing as an effective and efficient alternative to in-house staff. This helps them achieve their dream to launch their own practice versus becoming an employee of a larger organization. To accomplish that, they’re comfortable with setting up a streamlined operational structure that includes external billing-support services; this enables them to focus on optimizing the health of their patients while minimizing financial risk. They maintain their independence and feel comfortable they’re being appropriately compensated for their services.

Evaluate All Aspects of Current Billing Processes
Just like making improvements in your own home, getting a provider organization’s financial house in order depends on having a solid foundation upon which to build. Finding the holes and cracks in your current foundation requires a methodical analysis of each of your current processes and how they work together. That’s the only way to see where the many handoffs and other potential causes of inefficiency are occurring and causing revenue leaks. Only then can you make educated decisions on how to implement best practices — some of which may be new to you — that plug those leaks and meet your ever-evolving needs.

This is only step 1 of a multi-step process (more on that in my next blog), but it’s critical to reinforce that this single step entails evaluating all aspects of your current billing process, including:

  • Understanding and establishing achievable expectations based on payer mix
  • Knowing the nuances of each of your contracted payers
  • Automating processes wherever possible
  • Creating a customer-friendly experience that includes making patient payments simple and upfront, improving cash flow and increasing patient collections while fostering satisfaction, retention and growth
  • Evaluating workflow for impact of value-based care reimbursement models

And then of course there are the related and critical aspects of provider credentialing, the encounter (charge) capture process, the intake process, and your approach to working your accounts receivable.

As noted, that’s a lot for your team to bite off. Plus, few organizations have staff with the ability to step back and take a focused and unbiased look at “the way things always have been done.” Is it any wonder that, as previously noted, 70 percent of Black Book’s surveyed providers are considering outsourcing their revenue cycle management to an outside expert?

With such an effective partnership, you can get your house in order now and set your practice to effectively navigate the future of healthcare so you can thrive for many years to come.

This article was originally published on iHealth Innovations and is republished here with permission.