RCM in the New Healthcare: How Hospitals and Health Systems are Adapting to Change

Oct. 4, 2016
Impact Advisors’ revenue cycle management practice director discusses the biggest RCM challenges hospitals and health systems are facing today, and RCM’s changing role in the new healthcare.

Last month, to supplement the Healthcare Informatics 100 list of top earning health IT vendors, our editors further broke down the top revenue earners in seven product segments. For the Financial Information Systems category, Scott Pillittere, vice president of Naperville, Ill.-based healthcare consulting firm Impact Advisors, and director of the firm’s revenue cycle management (RCM) practice, gave his thoughts on how the segment has changed. “There has been a large push to implement new electronic health records (EHRs) over the last few years, in which ‘foundation’ solutions were implemented for the revenue cycle with most of the focus being on the clinical side of things. Given this, healthcare organizations were left with revenue cycle systems that would work, just not well,” Pillittere says.

Serving as an extension of that product segment breakdown, Pillittere, tasked at Impact Advisors for the last year with growing the practice and making the firm a major player in the revenue cycle consulting market—and before that holding a similar role at Stockamp & Associates (eventually bought by Huron Consulting Group) for 13 years—spoke further with Healthcare Informatics Managing Editor Rajiv Leventhal about the biggest revenue cycle challenges hospitals and health systems are facing today, RCM’s changing role in the new healthcare, and what organizations need to do to better their revenue cycle strategies. Below are excerpts of that interview.

What are you working on now to help hospitals with revenue cycle?

What’s selling heavy for us now is that a lot of organizations have either [just] gone through a major EHR implementation or are actively going through one. Or, they are still feeling the pain from going through one five years ago. In all three of those settings, we are selling a team coming in to help transform that revenue cycle into a new environment. And that can mean several different things around optimizing what they put in place, and not just optimizing the system but everything around it. It goes back to the four core bubbles: people, process, technology, and culture change. You need to hit on those pieces to advance them in their financial performance.

When you say the “new” environment and RCM’s role in it, what are you specifically referring to?

Most of the conferences you go to now talk about value-based payment and what will happen in the future. I still find that there is very much a “back to the basics” need in the industry. The environment has changed, and people are not quite sure what to do in it, so they just want to get back to the basic blocking and tackling they were used to be able to manage the revenue cycle. There aren’t as many discussions around “what about value-based payment?” but more around not being able to bill and collect appropriately.

One client we have in Minnesota did create an ACO-focused organization to be an advanced player in it, but I don’t think it ever got fully ramped up. Good data analysis came out of it, but nothing stellar. And they were the only client of mine who even took a step towards something like that. Most of my clients don’t have the appropriate decision support systems or data to be able to provide them with what they need to strategically think about services and reimbursement.

What do organizations need to better transition and evolve?

They need two things: focus and data analytics. When you go live or if you have gone live on a new EHR or revenue cycle system, you generally have the standard report that comes out, but there are so many standard reports that you probably have not gone through and appropriately inventoried to understand what the new reports were going to be and how you were going to use them. Organizations that have been on Epic for four or five years are still trying to figure out “point one,” so they haven’t even advanced to “point two,” which is to prove the data analytical function of “we have a trend, let’s research the trend, understand it and solve it.” But you need the data to understand what’s happening, and they are not at the point yet since they are still scrambling to get what’s needed from upfront.

I was on a call with a CFO recently and they have been live on Epic for about a year, on a community connect model, meaning they are using someone else’s Epic, and they have an 80-report backlog, no one to create reports, and haven’t even thought of the data analytics and what will be required to advance them. One of the things I always recommend is having a data analytics team off to the side of the revenue cycle. They should control it for both the hospital and the medical group, so they can truly understand what’s happening and where they need to go to.

Scott Pillittere

What trends do you see around integrating clinical and RCM systems?

It is happening now, and it usually comes with an integrated solution like you see with Epic. Cerner is trying to get there; that is one of their main sales slogans—providing you with a fully integrated solution. Having the integrated system pushes the issue of resolution ownership further up in the revenue cycle and possibly back to one of the clinical areas. And that’s [new], so there is an education piece and culture change piece needed.

Any time you have integration and it is proven integration, you’re going to have a better success rate of charges transferring and having the information needed in the revenue cycle environment. If a system is integrated both clinically and financially like with Epic, they have done the testing and resolved issues. So in those cases, it’s about working with the technology to make sure it fits into your culture.

Patients are now taking on more responsibility for their healthcare costs. What impact does this have on an organization’s RCM?

Historically, most of the healthcare organization wouldn’t worry about the self-pay component, and wouldn’t really even follow up on it after the fact. Now, the industry is paying more attention to the self-pay balances. Upfront collections have now become much more important, especially from those private-pay patients. Propensity to pay tools are becoming increasingly important, so you are purposely going after patients who will pay rather than pursing every dollar. It’s logic-based follow up in a sense to try to get the payment. Also, I have seen a more strategic use of vendors for the self-pay population.

What are other RCM issues you are noticing at organizations?

When we go in, our main goal is to try to improve the financial performance of the organization. Healthcare organizations continue to see their margins bend, so they have to cut heads, and those are administrative or business operations focused, not clinically focused. So generally when I go into an organization and see their revenue cycle department, they’re usually inappropriately staffed to work the level of accounts they need to work. That’s too common and it will become even more prevalent going forward. Their strategy for how to work all the accounts is no longer appropriately aligned. So they need to come up with a global strategy to decide what to do in-house, and what to use vendors and tools for.

You don’t hear much about ICD-10 anymore, but how has that affected the revenue cycle?

For most of my clients, it wasn’t as big a deal as most people thought it would be. Yes, there was a slowdown in productivity and there was a learning curve. But as I look at my clients’ financial performance, the ICD-10 change didn’t impact it much at all.

Can you give a few parting words of advice for organizations looking to improve their RCM?

You need to have a true revenue cycle strategy. Clearly define who will work what and how you will manage the entire revenue cycle. Secondly, identify the areas where you have gaps in people process, or tools. And then fill those gaps. If you can’t hire resources, that’s where the strategy comes in. I preach the 80/20 rule: 80 percent of the dollars are in 20 percent of the accounts. So your staff should be focused on that 20 percent.

A lot of organizations are of course mission driven, and anytime you get into a mission-driven organization, they are reluctant to change how they screen or accept patients for non-urgent visits. That is a big area that needs to change, otherwise organizations will continue to see their bad debt increase. I often ask leadership, “How flexible will you be on rescheduling if a patient who is self-pay and has the ability to pay, but hasn’t paid up front or isn’t getting back to you?” We do an assessment every time we go into an organization, and you no longer find the “train wreck”; it’s harder to find where those dollars are. They are still there, but it’s not quite the easy, low-hanging fruit that it was a few years ago.