Most CFOs believe their jobs are on the line if they can’t rescue their hospitals with better revenue cycle management technologies.
- More than half of chief financial officers at struggling hospitals expect to be fired within the next two years for inadequate revenue cycle management (RCM) infrastructure that relies too heavily on outdated software and fee-for-service models, says a new Black Book poll. As healthcare organizations face a difficult time in 2015 with ICD-10, Stage 2 meaningful use, and the beginnings of penalties for non-participation in CMS quality programs, a hospital’s ability to implement and leverage next-generation RCM tools may be a deciding factor in which organizations remain in business just a few short years from now.
Of the 2,330 hospital CFOs, CIOs, and business managers responding to the Black Book survey between June and October of 2014, 40% self-identified as working in hospitals that are financially overextended or insolvent. Those hospitals are suffering from the aftereffects of poorly thought-out EHR and patient portal implementations as well as attempting to shoulder huge amounts of bad debt, the impact of high deductible health plans, larger patient responsibilities and a widespread lack of insurance coverage.
Ninety-one percent of purchasing officers are looking for patient estimation tools that will help manage insurance verification, covered services and providers, benefit structures, and pricing transparency in order to more efficiently collect on patient responsibilities. Eighty-six percent of CFOs from struggling hospitals believe that these technologies will be crucial if they wish to keep solvent, but they also feel as if they are being asked to pull a miracle out of nowhere. Nearly three-quarters of CFOs are under pressure to make complex RCM technology decisions without enough funding to acquire best-of-breed products, and fear that the conundrum will significantly affect their job stability.
“Most hospital CFOs have no choice but to leverage next generation RCM solutions in order to keep their organizations solvent,” said Doug Brown, Managing Partner of Black Book. “Hospital viability has never been more thoroughly secured to a single organizational venture as revenue cycle management transformation. And chief financial officers in struggling hospitals are in a very perilous position as the risk models are still being charted while limited funds remain for next generation RCM tools.”
Close to 30% of CFOs at small or community hospitals believe they will lose their jobs in 2016 regardless of how well they perform over the next year, while 11% of financial officers in larger organizations agree with that prediction. Thirty-five percent of CFOs in struggling hospitals think they will be replaced by executives from outside the healthcare industry who may have a fresh perspective on the way hospitals are handling their financial woes.
The result of the widespread trepidation is that hospitals with tight margins are hunkering down to focus on what is absolutely critical at the moment. The vast majority of well-off hospitals may be committing to advanced RCM software, population health management programs, and risky accountable care arrangements, but 86% of those at financially stretched organizations are putting all those initiatives on hold until at least 2016.
The gulf between the “haves” and the “have-nots” will only grow over the next few years, the surveys predict, as financially secure hospitals leave their falling comrades in the dust. Hospitals that do not successfully leverage RCM tools to rescue their revenue may be putting themselves at risk for acquisitions on unfavorable terms, or may even be forced to close their doors. “Increased self-pay volumes, lack of pricing transparency, no patient financial responsibility/estimation technology, and other reimbursement challenges are driving many marginally performing healthcare organizations to the brink,” Brown said. “Most hospitals have no choice but to look for next generation RCM solutions in order to keep their organizations solvent.”