Revenue Cycle Management as Return on Investment

April 23, 2015 - Consider for a brief moment a patient's numbing fear stemming from unexpected sticker shock when perusing a medical bill’s enigmatic extra zeros or from receiving a hefty stack of unforeseen payment requests post-service. 

The delicate art of keeping patients financially informed can be an overwhelming task for any healthcare organization. Revenue cycle management primarily dictates the overall quality of patient experience within the healthcare industry. How can patients become better informed and, therefore, happier with their overall billing experience?

Helping provide resolutions to such questions, Jeff Hurst, Senior Vice President of Finance at Florida Hospital and guest speaker at HIMSS15, spoke with RevCycleIntelligence.com about Florida Hospital’s financial assistance methods to improve revenue cycle outcomes and generate patient satisfaction, cash acceleration, and bad debt reduction.

Hurst proposes the healthcare industry should collectively aim to streamline its revenue cycle initiatives and allow patients greater flexibility regarding payment options. Providing patients with informed, educated opportunities, Hurst explains, and focusing on a more clinically aligned revenue cycle approach, will strengthen the healthcare industry at large and steadfastly improve the quality of value-based care patients receive. Hurst additionally suggests healthcare organizations can financially prosper by actively considering revenue cycle management from a business perspective with a narrowly defined focus on the overall return on investment.

RevCycleIntelligence.com: What do hospitals tend to overlook regarding patient satisfaction?

Jeff Hurst: The primary area where hospitals overlook patient satisfaction is on the financial side, specifically, the revenue cycle. Clearly there’s been significant work done on patient satisfaction and enhancing the patient experience over the last five to seven years on the clinical side of the hospital. And there’s room for improvement on the financial side of the house.

If you think about the patient’s first experience and last experience with any healthcare provider, it starts and ends with the revenue cycle. A patient can have the greatest clinical experience, but if there’s an issue on the front end or the back end from a revenue cycle standpoint, that’s the first and last impression a patient will have.

RevCycleIntelligence.com: Regarding your patient experience initiatives, what opportunities does Florida Hospital take advantage of to best smooth out wrinkles within the billing process?

JH: Typically, the whole post service billing process is very confusing for a patient. They get multiple bills from multiple providers. You always get the patient who calls in and says, ‘I have five bills from five different providers and I don’t know who I owe. Can you help me?’ There’s lots of opportunity on the back end of the revenue cycle to streamline the whole billing process and move more towards a consolidated billing program.

The other area where we typically have an opportunity to improve upon is how we counsel patients about their medical bill and the options to pay that bill. At Florida Hospital, we’ve transformed the conversation away from “collections” to “resolution.” In some cases, patients simply can’t satisfy their obligation to the hospital through a single payment.

RevCycleIntelligence.com: How is the role of the accountable healthcare consumer evolving?

JH: You have to change the conversation with patients and begin to talk to them in terms of resolving their responsibility over time. There still are, of course, instances where the patient can and should satisfy his or her responsibility by a single or short-term payment schedule. But with the ongoing increase in patient out-of-pocket and higher deductibles, it’s becoming increasingly more difficult for patients to satisfy their responsibility, at least in a short period of time.

The mind set of, “you need to pay in full at the time of service or you need to pay in full when you get your initial bill,” has to transform to a more consumer-friendly mindset. You really need to be a little more flexible in how you’re approaching your patients in terms of those who want to satisfy their responsibility but just need a little bit more time.

RevCycleIntelligence.com: Where should the healthcare industry focus its energies next within a mainstreamed age of healthcare consumerism?

JH: We’ve got to move more and more toward a streamlined billing process that’s simple for the patients to understand in terms of helping them satisfy their obligation. We need to become more flexible on the back end. This idea that one size fits all isn’t the case. In our organization, we have Medicare patients, we have commercial patients, Medicaid patients, we have the uninsured, the younger generation, the older generation.

On the front end, there’s a lot of conversation about patient estimates. For me, it’s less about patient estimates specifically and more about creating a better, more timely expectation for patients so that they can make the right decision and they can make an informed decision about their care needs.

RevCycleIntelligence.com: How can patient communication be strengthened?

JH: We’ve recently remodeled our patient estimate process and transformed it to the extent that we’re not just explaining to patients what they owe. We’re actually explaining to them in more detail how we arrived at that number, given their benefit plan and where they are in their benefit year.

Most people, given an informed opportunity, will make the right decision and do the right thing. There’s some work we can do on the front end around education and awareness and really helping patients understand what does it really mean when you have insurance, especially now in this environment of open enrollment.

There are many patients who are newly insured. In some cases, this is the first time they’ve had insurance and they may or may not really understand what it means in terms of their individual responsibility.

RevCycleIntelligence.com: How is the overall perception of revenue cycle management evolving within the healthcare industry at large?

JH: Historically, the revenue cycle has been regarded as overhead, support or shared services – basically an operational expense to be managed and minimized as much as necessary. Given the complexity of healthcare and the importance of consumerism, the industry really needs to begin to look at the revenue cycle as a strategic business unit.

Much in the same way that you would look at a hospital facility or physician group or a service line, we should transform the conversation about the revenue cycle department from expense management to return on investment. We should start thinking about where to make strategic investments in the revenue cycle. Although this may add additional cost to the expense line, it more than pays for itself in actual revenue generation.

RevCycleIntelligence.com: What are your strategies to maintain operational efficiency? How have they adapted over time?

JH: What we try to do is transform the conversation with patients from one of collections to one of resolution. If you’ve created processes where you’re chasing after people to get them to pay and they simply don’t have the ability to pay, to a certain extent, you’re really throwing good money after bad.

The more you can engage with your patients up front, the more you can triage them from a financial standpoint upfront, the better off you are in determining the best resolution for the patient and for the organization. Anytime you can have that conversation early in the process, it makes it much easier to route the patient to the appropriate team, whether it be financial assistance, Medicaid, payment in full, some type of patient payment plan, or a patient loan.

RevCycleIntelligence.com: In regards to the value-based care movement, how do you keep expenses low and quality high?

JH: With the way value based purchasing is structured, if you’re not producing quality outcomes in a variety of areas, you’re going to have an impact on your reimbursement. I may not necessarily look at it as keeping expenses low as much as ensuring the strength of your bottom line from an earnings standpoint.

We’ve made significant investments in our care management team. We’ve created a more expansive model putting care managers in our emergency rooms and creating a care coordination center on the back end. All of that is really driven toward trying to more effectively manage the patient’s care experience and his or her outcome.

If you look at our emergency rooms today, about 45 percent of our Emergency Department [ED] utilization is unnecessary because it’s non-emergent care. Instead it’s care a patient could receive at an urgent care center or the primary care physician’s office.

We’ve put care managers in our emergency rooms to engage those patients up front to have an informed, educated conversation about the reasons they came into the emergency room. If the service they’re receiving is non-emergent, our care managers take it one step further in terms of really holding the patient’s hand and helping him or her identify a more appropriate care setting.

So going forward, the patient can get the care he or she needs probably in a more timely manner, probably at a lower price point, and probably in a more appropriate care setting. That will improve the overall health and well-being of our patients in our community because they’ll be getting the right care at the right time in the right setting.

There’s a financial benefit to the hospital in terms of defraying some of those costs that we’re incurring today in the ED by taking care of those patients who could be cared for in a different setting and at a lower cost.

RevCycleIntelligence.com: How can hospitals effectively maintain financial stability?

JH: If I look at where most hospitals have the biggest financial burden, it’s in the area of uncompensated care, predominantly in the area of bad debt. Oftentimes, we look at engaging with the patient and managing our bad debt as somewhat competing and conflicting priorities. There are actually interdependent and complementary.

If you come into our organization as an uninsured patient, about 50 percent of the time, we’re going to get you qualified for Medicaid. We get two benefits out of that. We now get paid by Medicaid for the services that we provide. Now patients have some type of coverage which allows them to have access to other providers in the market above and beyond the hospital system. By making an investment by spending money, we’ve actually strengthened the hospital from a financial standpoint and also collaborated with the patient to get them the coverage they need.

With the insured population, if you look at our average out-of-pocket responsibility for our patients over the last four years, the average out-of-pocket went up about 18 percent by $250. Where we’ve seen all of the growth in terms of patient payments has been in this area of patient loans.

That’s not by coincidence. If patient responsibilities have increased, patients still want to do the right thing. They just need a little more time to do the right thing. If patients’ out-of-pocket continues to grow, we’re going to see even greater need for more flexible payment options on the back end to give our patients a little more time. That’s good for them and it’s good for us.