Costly Aspects of an Overstretched Revenue Cycle Management
By - It is imperative physicians adequately review all expected possible financial shortcomings within revenue cycle management to immediately improve long-term healthcare performance and pinpoint performance opportunities that are commonly ignored or overlooked. As Benjamin C. Colton and David A. Wofford of ECG Management Consultants state, the concept is simple — incapable management wastes valuable money.
The result includes a strained patient/physician rapport and mismanaged facilities that are stretched too thinly to function effectively, thus lowering the overall emotional quality of an individual patient’s experience.
Nonetheless, this lack of engagement hinders effective revenue cycle management, particularly when there is a general lack of personal value and respect for the employee and the collective whole.
“Organizations that do not engage in thoughtful preliminary planning regarding revenue cycle operating standards for physician practices, however, can find themselves with a mixed bag of acquired practices that are both difficult to manage and unprofitable,” the authors add.
Shrinking management personnel within billing office staffs where fewer individuals collectively take on greater levels of responsibilities pose hindrances that negatively affect operational and financial aspects and foster a more hearty outpour of patient complaints.
A new RCM survey by NextGen Healthcare provides proof. Considering ratios within billing offices, for instance, “77 percent [of practices reported] having between one and 10 people working in their billing offices [while] 7 percent said they employed 25 or more across billing functions.” Such practices generally had “1:1 provider/biller ratios.”
“On average, practices reported their billing professionals could post 137 payments and adjustments each day.”
Insufficient knowledge of technological skills and high-quality employee aptitude is therefore often cited as becoming commonplace.
“Unfortunately, revenue cycle management is often a thankless role with an unclear career path and therefore does not always attract top talent,” write Colton & Wofford. “Consequently, as physician practices are rapidly consolidated under hospital or health system ownership, the demand for people with the requisite skills is almost certain to exceed the supply, and it will be common to find revenue cycle managers (and even directors) who struggle to see the way forward for their operation.”
Also, although the possibility of outsourcing sections of a revenue cycle’s billing functions is often considered as an attractive option, if executed without a “sound, performance-driven contract that holds the vendor accountable,” it is often less effective than independent operations — “Healthcare organizations that outsource portions of their revenue cycle operations typically do so to access advanced practice management capabilities more quickly or more economically than they could if they developed the operations on their own,” the authors maintain.
Likewise, percentage payouts are not always beneficially akin to expectation and can sometimes result in less gain than initially anticipated:
“[Most] billing agencies are paid a percentage of collections — an approach that would appear to align incentives, but may not always work in practice,” Colton & Wofford continue. “Because the billing company keeps only a small fraction of what it collects, claims that are difficult to collect are actually money losers for the billing company, so the company has an incentive to write them off rather than make an effort for a small and uncertain return.”
Finally, one particularly financial pitfall involves inadequate attention to coding. This often leads to “costly repercussions, such as an increased billing lag and unnecessary denials” and support for the fact that “better-performing organizations maintain coding programs that are designed to balance regulatory compliance with revenue maximization.”
A primary reason to analyze revenue cycle management is the widespread acknowledgement and expectation of increasing healthcare spending within the next several years.
