OPTIMIZING REVENUE-CYCLE MANAGEMENT SYSTEMS OF HOSPITALS
By Larry Carter
Integrated information management systems, combined with redesigned revenue-cycle processes can deliver
financial improvement to a hospital’s bottom line. Unfortunately, information technology systems also can be
complex and costly, especially for community hospitals. To deliver maximum return on investment, the
hospital’s IT expenditures must be guided by well-defined and measurable financial objectives and
expectations. The key to optimizing technology investment is developing an understanding of the challenges
that face existing revenue-cycle operations, the role of IT in transforming the revenue cycle, and critical
factors that contribute to successful project planning and implementation.
Every healthcare provider realizes that business processes need to be consolidated and automated to save
operating expenses, increase revenue, and improve the patient's experience. Yet most healthcare facilities
organizations that have undertaken initiatives to optimize revenue-cycle operations find this goal distant
and challenging. Current revenue-cycle processes typically suffer from duplication of effort and overlap of
responsibilities. There's little sharing of resources to improve operational efficiencies and leverage
economies of scale. Accountability for improving overall business performance is lacking, and workflow is
not well automated. Data are often incomplete and not integrated across the clinical, financial, and
demographic categories. Systems do not easily capture chargeable transactions as a byproduct of care
activities. Too often, healthcare organizations find themselves buried in paper and paperwork, resulting in
many performance-related issues, including:
- Increases in the number of accounts receivable and length of time since billing
- Decreased cash collections and profit margins
- Billing backlogs
- Increased bad-debt expense
- Increases in the number of claims that fail to meet the complex and shifting processing requirements
of health plans
- Poor employee morale
Adding to these pressures is the knowledge that fixing these problems involves some element of risk, and
that failing to fix them is riskier still--and much costlier in the long run. If not addressed, today's
marginal financial performance will soon become tomorrow's noncompetitive profit margin. Effective use of
technology opens the door to a variety of opportunities. Information systems and networks are taking on
unique responsibilities, such as providing the technological blueprint for a new business model based on
better collaboration among healthcare consumers, payers, providers, and even suppliers. Also, healthcare
providers are coming to understand that business-office functions are often a patient's first point of
contact with the organization and can lay the foundation for a positive experience and satisfied, loyal
customers.
A new business imperative for IT is to play a greater role in enabling closer, more profitable
relationships with patients. These challenges and opportunities, finding the money to spend on IT
initiatives is not easy. Shrinking operating margins and stagnant budgets for back-office functions make
investment in new technology solutions a challenge in itself.
Effective use of IT is key in transforming today's revenue-cycle processes. In many organizations,
traditional revenue-cycle processes are supported by a separate system that runs proprietary applications.
Thus, patient access, denial management, charge capture, clinical integration, documentation and coding,
billing, and cash collection processes communicate poorly, if at all, with each other. Antiquated or poorly
implemented enabling technologies can become business-performance disablers. Legacy systems can be difficult
to upgrade for increased functionality and can often lack the capability to support redesigned business
processes. In some instances, adapting core systems to support web-based solutions may be difficult or
impossible.
In addition, the information used by these systems is stored in at least three separate repositories,
which are used for patient management, clinical, and patient financial data. Integration among these
disparate systems and repositories is essential to improve financial performance of revenue-cycle processes,
both individually and collectively. Yet the goal of seamless integration of data and information systems
across the entire revenue cycle still remains tantalizingly just out of reach. Even in today's web-enabled,
high-bandwidth world, providing an entire organization and outside entities with revenue-relevant
information is a hit-and-miss proposition. HIPAA helps with standards, but it only gets providers so far.
IT needs to transform today's revenue-cycle processes from business support functions to champions of the
bottom line. Today's technology should serve to make patient financial and eligibility information
accessible (with appropriate permissions) to patients, consumer information seekers, suppliers, financial
institutions, payers, and collection agencies. Eventually, web-based solutions should link financial and
clinical information and provide secure access to these integrated data throughout the supply chain.