Investing in Revenue Cycle Management
In August, I had the treat of attending KLAS’ Digital Health Investment Symposium (DHIS). This gathering allowed providers, vendors, and investors put their heads together on hot topics such as cybersecurity and precision medicine. Me? I got to facilitate a dialogue on a topic closer to my heart: revenue cycle. (Yeah, I’m kind of a nerd.)
Starting with Revenue Cycle 101
I began our panel discussion with a personal experience. I’d recently attended a revenue cycle leadership conference with about 300 attendees. At one point, our hosts realized that we wouldn’t be able to cover all 10 or 15 of the topics on the docket, so they let the attendees decide which topic on the list they wanted to touch on first.
With one look at the list, I pulled out my notebook and prepared to scribble; I saw tons of market buzzwords and couldn’t wait to hear which one would be chosen. The first vote was for bundled payments. How many people do you think raised their hands?
Three. There were only three.
Activity-based costing? Six hands. Patient payments? About a dozen. Then we got to authorizations and denials, and almost every hand in the room went up.
I turned to my friend sitting beside me, who is a VP of revenue cycle. “I want to discuss everything on the list,” he told me, “but it’s hard to get to Revenue Cycle 201 when 101 is still bogging us down.”
This was a sobering reminder of the problems revenue cycle leaders face on a day-to-day basis. Their side of the hospital is both blessed and cursed with the most data. This means that the need for improved revenue cycle technology is staggering.
However, I've talked to quite a few CFOs who are afraid that if they shut the door too hard, their A/R days will start to go up. That’s why those in revenue cycle are very risk averse and therefore conservative buyers. Despite all of this, there is great opportunity in this market that shouldn’t be discounted.
From the Experts
If KLAS has learned anything over the past 20 years, it’s how to sit back and listen to the real experts: healthcare providers and their leaders. With that in mind, we managed to line up three expert panelists. They discussed the successes they have achieved and problems they hope to solve in the revenue cycle.
Steve Burr of Atrium Health (formerly Carolinas Health System) shared his philosophy about revenue cycle outsourcing. “We figured out what we’re really good at. We do the best we can with those things and then fill the remaining gaps via outsourcing or other options.”
Burr also spoke about his recent work in single-pathway coding. The goal is to increase Atrium Health coders’ ability to use only one code per episode; this should also reduce the FTEs needed for coding.
Richard Silveria of the University of Chicago echoed the other panelists’ complaints about the chaos that is the revenue cycle. “We have a common data set and common formats,” he said, “but there is tremendous variation in how the data is used.”
Silveria is currently looking for ROI-heavy investments to consolidate approaches and improve the agility of the University of Chicago’s revenue cycle tools. His vision centers around removing friction from the data-exchange process.
Ramona Fryer of Franciscan Missionaries of Our Lady Health System shared a tale of consolidating three business office and keeping their cash flow constant throughout the process. Their system changes allowed the health system to reduce staffing and gave them additional reporting with clear visibility into their denials.
One of Fryer’s biggest worries is simply the number of denials in her box. “We have got to figure out better ways to handle them,” she said, noting that a focus on both technology and payer relationships will be necessary in the quest for improvement.
Worth the Investment
Our panelists’ words reminded me how broadly revenue cycle challenges stretch and the value of getting the “basics” down to a science. The healthcare IT market is full of fascinating and important areas needing attention, but investors would be hard-pressed to find an area that directly affects more patients than someone who really advances the decrease of authorizations and denials.
“I tell my employees every day, ‘This is money that our patients have paid,’” Fryer said. “We can never forget that.”
No matter who you are—a provider working in revenue cycle, a vendor with revenue cycle tools, or an investor wondering whether you can make a difference in the revenue cycle market—I hope these few words from DHIS 2018 have convinced you that revenue cycle is worth every kind of investment.
I’m looking forward to 2019’s iteration of the Digital Health Investment Symposium, and the content that KLAS - along with sponsors like Triple Tree, Marwood Group and L.E.K. – will bring to the table.