Chartis Group Consultants: It’s Time for Patient Care Leaders to Rethink Revenue Cycle

April 7, 2017
Kevin Ormand and Todd Bankhead of The Chartis Group believe it’s time for the leaders of U.S. patient care organizations to strategically rethink how they approach revenue cycle management—and for them to stop thinking in terms of revenue cycle management as a “cost center”

Just as every other area of activity in U.S. healthcare is experiencing major change right now, so is the revenue cycle management area. Historically, revenue cycle management was viewed in a very narrow way, as a departmental function within the finance department. Yet a number of factors are forcing a shift in perceptions of this area of activity, and rightly so, say the authors of a new white paper from The  Chartis Group, the Chicago-based consulting firm.

Last month, Kevin Ormand, Thomas Kiseau, Todd M. Bankhead, and Catharine Wilder published The Chartis Group’s white paper in this area. “The Next Strategic Imperative: Rethinking Revenue Cycle Transformation,” looks at the dramatic changes taking place around payment and operations in U.S. healthcare, and how those changes are impacting revenue cycle management.

Among the areas that the authors see as being particularly impactful, the write that “[R]evenue cycle operations across the nation face ever-increasing pressure to adapt, as the healthcare organizations they exist within move to position themselves in the rapidly evolving healthcare context, complicated by new forces such as:

>  The regulatory ‘alphabet soup’ of ACA, MU, ICD-10, MACRA, MIPS, ACO, and VBC [the Affordable Care Act, the meaningful use program, the ICD-10 coding system, the Medicare Access and CHIP Reauthorization Act of 2015, the Merit-based Incentive Payment System, and value-based care]

>  The rapid consolidation of health systems and physician groups, creating entirely new lines of business for which revenue cycle operations are now accountable;

>  Increased payer complexity (i.e., multiple contract types and new reimbursement vehicles) and new pricing algorithms; and

> The rise of high-deductible health plans and increased patient financial responsibility.

For many organizations, the tidal wave of change in a relatively short period of time has made it even more challenging to manage… the most fundamental attributes and indicators that drive performance,” the authors write.

The white paper’s authors focus on three areas that they believe will be critical for the leaders of patient care organizations: innovation, investment, and integration. With regard to innovation, they write that “Health systems must embrace a necessary (and potentially disruptive) overarching evolutional paradigm shift in conventional revenue cycle practices. Driving this shift is a transformational cultural and environmental change centered on entrepreneurialism and creativity. Such innovation,” they state, “helps to avoid becoming obsolete and creates the ability  to nimbly scale to known and unknown headwinds.”

With regard to investment, they state that “Strategic investments must be made in automation, technological advancements and a robust recruitment and retention program for highly motivated, team-centric and ‘Lean-savvy’ talent. Such investments run counter to short-sighted cost containment exercises by demonstration ROI and recognizing more significant longer-term sustainable reduction in the cost to collect. This ultimately increases net patient services revenue and drives efficiencies.”

With regard to the concept of integration, the white paper’s authors say that “Health systems must move beyond their current view of revenue cycle as a cost center. It is essential to create a holistic governance model that oversees the full integration of revenue cycle, clinical and operational workflows that are truly aligned with patient-centric processes and go above and beyond expected standardization and centralization programs and efforts. The structure,” they assert, “is necessary to avoid being ‘out-gamed,’ outnumbered and at the mercy of payers’ adjudication bureaucracies and denial algorithms.”

Shortly after the publication of the white paper, two of its authors—Kevin Ormand, who is director and leader of the revenue cycle group at Chartis, and Todd Bankhead, who is a principal at Chartis—spoke with Healthcare Informatics Editor-in-Chief Mark Hagland regarding the white paper’s conclusions and their perspectives on where revenue cycle is headed within the U.S. healthcare system. Below are experts from that interview.

It seems as though we’re at a particularly interesting inflection point in terms of revenue cycle management right now, with massive changes in reimbursement triggering the willingness on the part of patient care organization leaders to rethink their approaches to revenue cycle, correct?

Kevin Ormand: I appreciate your acknowledgement that people are starting to step back and say, OK, I get how important this is. Because there was a tendency to oversimplify and commoditize and put it into a little corner and say, we’re providing care, those people are taking care of the revenue. The proliferation of the EHR [electronic health record] has helped people realize the revenue cycle component associated with everything in the EHR. There’s a component of nurses’ and physicians’ documentation that will impact their revenue cycle. We’ve moved into a space of duality, where you still have standard commercial contracts in myriad versions, yet you’re also getting VBP-based contracts; that’s really emphasizing the connections between clinician documentation and revenue cycle.

In the white paper, you talk about the ‘ecosystem’ of the revenue cycle process within patient care organizations.

Ormand: I was a biology major originally, so the terminology resonates with me. Peter Senge’s concepts of the learning and living organization. Historically, we’ve focused on expense management, with multiple feedbacks and managing to a budget. In healthcare, we historically haven’t looked at it from a revenue perspective. In the white paper, we identify four different areas: strategy drivers to revenue, payer drivers, clinical drivers, and your traditional revenue cycle component—those are the four components of the ecosystem. But 75 percent of the success of that fourth group is dependent on those previous three areas. How well are you feeding those processes? All that stuff impacts your ability to bill and collect and get the money back for the great care delivered.

Was there a benefit to the run-up to the transition to ICD-10, in that people started looking at those ecosystem issues?

Bankhead: I would say, certainly that that was helpful. As you established the interdisciplinary groups to tackle ICD-10, that established better connections among the disciplines, so that helped. In the white paper, we established a sense of urgency by talking about three critical imperatives—the three Is—innovation—really getting away from the mindset of revenue cycle as an administrative overhead or cost center—and thinking about revenue cycle as a profit center, and therefore the investments you make in people, training, and technology, being much more strategic and looking at those investments you’d make over time, like an MRI, as opposed to being very hamster wheel-minded. And the other I is around integration, making sure you have the interconnectivity across those elements. Investment was the other I. Investment, innovation, and integration, in no particular order, because each organization has its challenges.

And people are very much looking at it around the cost to collect and the overhead, so there’s still very little investment in people and training. You need to create innovative environments around talent, that’s very entrepreneurial.

What are the most innovative hospitals and health systems doing out there right now?

Ormand: Very few organizations are stepping back and devising a long-term strategy for how they’ll continue to evolve in this space, but there are some organizations that have developed scale through merger and acquisition to really redefine what we call ‘collective insourcing’—how they’ll provide revenue cycle services back to their constituents. But regionalization and standardization of certain functions are among the strategies—with very defined service agreements.

What should CIOs and CMIOs be doing, in terms of working with the CFO and her or his team, and at the c-suite level, to improve how they strategize for and manage revenue cycle management?

Ormand: I think that we can all step back and look at the evolution of the IT department within a health system, within the last 10 years. The way that we support information technology within our provider organizations has progressed and evolved, in terms of skill sets, in terms of discipline; and it’s not uncommon for the IT department to be the true change agent in an organization. That’s both the CIO and CMIO leading that charge. And often, they’re providing the structure of the vehicle, but they’re wanting the department leaders to lead.

They’re being facilitators, in the best way, correct?

Ormand: Yes, and I think they can continue in that facilitation role, in helping to build a vision for the organization in how the ecosystem needs to be supported from a revenue perspective. How we are set up, and where the gaps are. There’s a lot that CIOs and CMIOs can do to help CFOs, and COOs, to create change. It’s hard to change, but first, you have to create a vision of what the organization needs, and include in that the patient perspective. The customer service aspect starts with the registrar, and extends to the last person they speak with at discharge, around customer financial liability. And I think the leadership within the IT space, could really help lead change. You can create a multi-year plan that incorporates those three Is—where do they need to innovate, etc. It’s the message that we’re sharing with our clients, and it’s resonating.

Is there anything that either of you would like to add?

The real call to action stems from the premise that the majority of our revenue cycle operations models just are not well-suited to today’s realities, let alone future needs. And that’s the other side of the coin to what I said: we need to build a vision, but it has to be galvanized by the realization that we’re probably not even meeting today’s realities well.

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