- As healthcare costs continue to rise, hospital revenue cycle management has become an important focal point for providers. Healthcare expenditures in the US are projected to reach $4.4 trillion by 2018, according to an article in The American Journal of Clinical Pathology. This would amount to 20.3 percent of projected gross domestic product.
It can be tricky for hospitals to maximize cash flow and net revenue when they are also supposed to deliver high-quality, effective care. However, if hospitals reduce unnecessary tests and overhead costs, raise patient satisfaction, use effective technology and identify key performance indicators that are likely to reduce spending.
RevCycleIntelligence.com breaks down the top five ways that hospitals that improve their revenue cycle management to slash waste, boost patient satisfaction, and maintain a high quality of care.
Reduce overhead costs
Keeping non-medical spending down can be a challenge for hospitals. Keeping up a healthcare facility as well as taking care of bill processing can eat away at a budget. Overhead is an area where cost-reduction can be achieved. It’s in a healthcare executive’s best interest to pay close attention to administrative costs. Sales and marketing budgets typically make up a large portion of administrative cost.
Bruce Hallowell, Managing Director at Navigant Healthcare, recommends that hospitals consider costs from the holistic approach. Hospital executives should determine if costs are a utilization or a variation. Variation is caused by management and causes cost, Hallowell explained.
“If I have four different managers doing the same function, I'm going to get it four different ways,” he said. This factor alone can run up costs. Hallowell believes that consolidating management layers can reduce overhead cost and help with the new payment methodologies. Hospitals that do this, tend to become more efficient.
Also, some facilities are employing external expertise to help lower cost structures by exploring outsourcing in information technology, finance, human resources, labs and pharmacies.
Raise patient satisfaction
Keeping the patient satisfied throughout all aspects of their healthcare experience has proven to be an essential ingredient for helping hospital margins. Higher hospital margins are typically distinguished by higher patient satisfaction. A recent report pointed out that hospitals in the US that gave a superior patient experience gained net margins that were 50 percent higher, on average, than those that provided an average customer experience.
If a patient feels unsatisfied with their office interaction, they may also have a negative perception of the entire healthcare facility. This can sometimes cause the facility to spend more time and money on customer service.
Keeping patients satisfied has many other benefits as well. Satisfied patients are more likely to adhere to prescribed treatment plans and keep up an ongoing relationship with a provider. These factors can lead to improved health outcomes.
Embrace the adoption of technology
When used correctly, technology can be one of the best tools a hospital can use to improve revenue cycle performance. Many providers are using telehealth technology as a key part of hospitals’ readmission reduction programs to deal with high readmission rates. By improving the follow-up care and care management of a range of patients, many providers have found that they are able to prevent a portion of avoidable readmissions. As a result, costs associated with high readmissions rates are lowered.
Additionally, clinical decision support systems have helped to reduce costs in some cases. These systems are geared towards overseeing laboratory utilization. They have the ability to significantly decrease the number of unnecessary tests ordered by clinicians without affecting patient care quality.
A branch of the Veterans Health Administration saved on averaged more than $150,000 per year for the two years after implementing a laboratory expert system that helped decrease test volume by about 11 percent.
Clinical decision support systems can also help hospitals save money if doctors use the systems correctly during the prescription placement phase of healthcare. These systems help providers to avoid making common mistakes that often result in high-cost prescribing behaviors.
Identifying key performance indicators (KPIs)
To reduce labor costs and increase efficiency, managers should have timely access to different types of data and KPIs that will help them monitor work hours, overtime, number of patients, and full- time employees per occupied bed. Healthcare executives benefit from carefully examining financial data.
They should capture and validate data from their organization’s financial systems to determine its current state of performance. They should determine which KPIs impact their organization’s revenue. It’s also a good practice to monitor KPIs for adequate and poor performance. It’s in a provider’s best interest to maintain KPIs and evaluate whether to add or remove metrics from monitoring.
Providers should specifically track KPIs for the transition care process and identify readmission issues. By doing this, providers will be able to assess situations and make continuous improvements.
Reduce duplications of tests and other services
In the US, redundant testing alone has been estimated to waste up to $5 billion each year, according to The American Journal of Clinical Pathology. It’s estimated that laboratory and pathology testing makes up 4 percent of all yearly healthcare costs.
“Laboratory testing is one factor that contributes to rising health care expenditures,” researchers from the journal said. “It is becoming increasingly evident that cost stabilization and reduction, including within-laboratory services, are necessary to place our nation’s healthcare system back on a sustainable course.”
To prevent unnecessary laboratory testing, providers should be cautious when they first order tests. Physicians can order tests effectively by using computerized physician order entry systems that allow for system-defined rules for utilization management.