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Revenue Cycle Matters - Insights & Tips to Improve Healthcare Collections

Why is Changing Revenue Cycle Systems So Hard?

February 14, 2016

As a vendor in the healthcare revenue cycle, I often talk with healthcare providers and hear the same message time and time again: "Change is hard." The change they refer to is not just changing roles in their business office or putting teams together to tackle their biggest challenges. The change they refer to is replacing their revenue cycle system.

A revenue cycle system is, by definition, intended to result in cash coming in faster and a decrease in the amount of receivables outstanding. That system should show you where you stand with cash, denials, A/R and user productivity.  It should show you how it is improving all those areas.  If what you currently use can't tell you this, then it's time to change.

Why is it so hard? I often ask myself this when this topic comes up. What I find time and time again is that it is because it is not a single system they are replacing. For that reason alone the task of changing one system, or much less all of them, seems daunting.  Yet they know the change must happen.

Replacing a revenue cycle system is a choice many healthcare providers must make as they grow or realize they need to make improvements in their organization. They recognize there is something lacking in their current system. Two things often happen when this realization occurs: the healthcare provider will utilize staff to do the work their current system is incapable of handling, or they purchase another system to "bolt on" and supplement the existing system. In either case, this is now where it becomes more and more difficult to change.

How it starts

Let's use Hospital X as an example. Over the course of several years, Hospital X has made changes to how they approach the revenue cycle. Years back, Hospital X selected a claim scrubber to ensure claims are free of errors before they go out to insurance payers. Not having a claim scrubber will result in those claims becoming denials that the staff will deal with one by one. Now Hospital X can be confident the claims will be paid. The claim scrubber they chose handles remittances as well. The insurance payers send remittances to the claim scrubber so payments can be posted back in to the patient accounting system. Sounds like a perfect system, right?

But what if a claim is denied?

A claim scrubber can't possibly know all rules for payers, so there are inevitably denials to manage. Denial management is needed to minimize write-offs. Unfortunately, the claim scrubber can't fulfill denial management needs and Hospital X decides to invest in a denial management system. The IT department gets involved because extracts are needed from the claim scrubber so the denial management system can have more information about the claims that were billed. The system is great because it can group denials together any way they want. The staff is trained on how to use the denial management system so they know what to fix on claims. The workflow is developed around the claim scrubber and the denial management system, and the staff work out of both systems effectively. Now it sounds perfect, right?

But why are there so many denials?

A denial management system is effective in identifying why a claim was denied, but with each denial there should be consideration for writing a rule in the claim scrubber to prevent future denials. Hospital X puts a team together to identify top rules and send them to the vendor that administers the claim scrubber. The vendor enters the rules in the claim scrubber and eventually the denials decrease to a manageable level. Is it perfect yet? Is the first pass denial rate low enough?

How do we know we are doing enough?

They could go with an analytics tool to show their performance in all areas.  But, hopefully you can see where this is going.  The last question sums it all up. There are investments being made by Hospital X in vendor systems and staff. As more processes are put in place for staff and as more vendors enter the picture, it becomes difficult to replace any piece. Staff are trained on the different systems and the workflow between systems. Different departments and teams within Hospital X handle different pieces of the claim workflow. IT is involved to make sure extracts produce and reconcile between systems. Further, Hospital X has become more vendor-dependent.

Multiple systems vs. a single system

It is in the best interest of a healthcare organization to move to single systems that handle as much of the revenue cycle as possible. Again, a revenue cycle system is, by definition, intended to result in cash coming in faster and a decreased the amount of receivables outstanding. That system should show you where you stand with cash, denials, A/R and user productivity. If all the systems you currently use can't tell you this, then you know it's time to change.

The reality is that they have been changing all along.  The more time goes on; the more people and process changes occur. The longer the change is postponed; the harder the change is. 

Technology offered by vendors is getting better and better. Your staff will be trained on that single system, so that all involved departments know how it works. The system will be easier to use. Everyone is on the same page. You know where you stand. And (here's the best part) if you don't like it, you can replace it with another system because change is now easy.

What has gotten in the way of you replacing your revenue cycle system?

 

Pat Curran is Director of Product Strategy and Development for OS inc.