Written by Molly Gamble and Ayla Ellison | July 03, 2018
The Becker’s team took to the exhibit floor at HFMA’s Annual Conference to, through conversations with more than a dozen experts, identify the biggest pain points hospitals across the nation are experiencing with reimbursement, cash flow and the revenue cycle.
We asked the following individuals this question: What are the biggest pain points you see hospitals and health systems encountering right now? Responses have been lightly edited for length and clarity. They are presented in alphabetical order.
Pete Bekas, Senior Solutions Engineer, MedeAnalytics (Emeryville, Calif.): “With a lot of the clients we talk to there’s an emphasis around denials and how to work those denials and mitigate them to the front end. We help them take corrective actions before claims are denied.”
Ed Caldwell, Chief Revenue Officer, CarePayment: “It’s the self-pay growth. Hospital operations are geared around collecting form insurance companies. The provider ecosystem is not built to engage the patient in an effective way. Hospitals traditionally haven’t been good at collecting from the patient.”
Jay Deady, CEO, Recondo Technology (Greenwood Village, Colo.): “Hospitals have reached the tipping point with how many claims they can follow up on and prior authorizations they can request through manual effort. It is now routine for individual staffers to be assigned thousands of these transactions to handle per month — and they can’t. Now add to that the growing number of patients requesting cost estimates. It’s clear that these high volume transactions are ideal candidates for automation, a movement we should all get behind. Otherwise, our nation’s estimated annual $471 billion spend on billing and insurance will continue to eat through our national healthcare budget.”
Chris Fowler, President and COO, CPSI (Mobile, Ala.): “We have big presence in rural communities and in the critical access space, but what we’re seeing is similar across the board. All hospitals — regardless of size — are struggling with some of the same issues: High-deductible plans and value-based care. They are struggling with connecting with patients to help them understand exactly what their responsibilities are. From a rural perspective, the hospital is not viewed as a business in the community. It’s a strange dynamic. So now the hospital is going from less than 10 percent of their cash coming from the patient to just short of 20 percent, at least among our clients. How do hospitals make that cultural change with patients so they see their obligation to the hospital to pay their bills?”
KaLynn Gates, Senior Vice President and General Counsel, AccessOne (Chicago): “The major paint point we see with hospitals is prioritization…the question, ‘What do we focus on in terms of priorities?’ Second is the question, ‘How do we get financial patient engagement conversation to the front end.’ That’s really responding to consumerism. Providers are doing it in little pieces — whether that is price transparency or being responsive with technology and kiosks — but how do you have a full response to the patient/consumer? How do you talk about how we afford the healthcare upfront? Everybody is trying to figure it out. Sixty-three percent of patients want those conversations upfront, but only 18 percent are getting them.”
Matt Hawkins, CEO and Board Member, Waystar (Louisville, Ky., Duluth, Ga., and Chicago): “We see a lot of health systems and hospitals burning a lot of calories on managing denials and really maximizing their revenue that they rightfully deserve and expending far too many costs and resources in containing that revenue.”
Kent Ivanoff, CEO and Co-Founder, VisitPay (Boise, Idaho). “Most health systems are contending with two dynamics. They’re vying for patients, and they’re focused more than ever on patients as consumers. Many systems have made an entire agenda around patient experience. Ten years ago the financial stakes were low for the consumers and providers. There wasn’t a sizable amount of patient obligations. That’s fundamentally changed. It’s an unintended consequence of the ACA, which constrained how insurers could underwrite the members they serve. As a way to keep premiums down, they could sell high-deductible health plans. But because consumers had to pay the first dollars, the providers became the recipients of the risk transfer. It not only worked on plans sold on the exchanges, employers also realized they could keep costs down by migrating to high-deductible health plans. The economic consequence is consumers now face a high deductible for every member of their family and providers have a higher proportion of revenue attributable to consumers. There has been tremendous margin compression for health systems.
Our clients are in markets where they’ve had deep relationships with consumers for decades. They need patient experience to be as dynamic on the financial side as on the clinical side. Consumers choose their providers, and they choose their health plans. Consumers are front and center.”
Steven Levin, CEO, Connance (Waltham, Mass.): “Cash flow and profitability are keeping CFOs up at night, and there is frustration with denials and underpayments. We are hearing heated frustration around questions like, ‘Am I getting paid fairly? Am I getting what I’m owed?’ There’s not a lot of efficiency or effectiveness in it, and hospitals are working to get back to where they started. Contracts are not black and white, and we spend all this time fighting to get back to where we were in the beginning. It’s a game of cat and mouse. Every day [insurers] change the rules, and they don’t even tell you they changed the rules.”
James M. Lyons, President and CEO, SSI Group (Mobile, Ala.): “Everybody in our industry is faced with the payment burden being shifted to the patient. This is a cash flow business, and when you have shrinking reimbursement every year … having that claim pass through the process the first time is a benefit to cash flow.”
Nick Mattia, Vice President of Sales and Client Development, CareCredit: “From our perspective, it’s taken physicians and healthcare systems some time to adjust to the new financial reality of healthcare consumerism. This shift has required providers to reevaluate and adjust their approach to billing and practice management as a whole, while also trying to focus on providing a positive patient experience. At the same time, providers are trying to better understand the changing needs of each generation of healthcare consumers — baby boomers, Gen Z, millennials — and how to best help them navigate this new landscape.”
Mike Morris, President, Xtend Healthcare (Hendersonville, Tenn.): “It is more and more difficult to effectively manage the economics of the hospital. Whether it is a short-term or long-term need, driving down the cost to collect is critical to the ongoing success of a health system.
One shorter term need is if you are going through a computer conversion — trying to manage that transition so your business office can focus on the new system really requires a plan for the wind-down of the old system. A lot of hospitals fail to get ahead of the A/R backlog on the legacy system early, in advance of the conversion. Sometimes health systems make a plan for their legacy system when they are only 30 days away from the go-live — the ideal time for that is 180 days. The second mistake is when the hospital’s business office focuses on the system they know well — the legacy platform — and then they don’t ever fully adopt the new system. Then after the go-live, most cash is coming off the new system, not the old one, and you have a mismatch of expertise.”
Allan Nalle, Chief Strategy Officer, Patientco (Atlanta): “So many health systems have been focused on patient access, but increasingly they are starting to think about financial access. They found the physician, they’ve gotten their service. Growing patient balances create an affordably crisis. Sixty-one percent of Americans cannot afford an unplanned $1,000 bill. There are more patients who are willing to pay than they are able. People have literally forgone care because of affordability concerns. That has a system impact on healthcare expenditures in the U.S. Hospitals are increasingly understanding that they need a revenue mindset toward patients, not a collections mindset.”
Joe Politi, Vice President of Solution Design and Delivery, RI RCM (Chicago): “One of the biggest pain points we continue to see is health systems increasingly competing on their brand and convenience, and entering the age of healthcare consumerism where there is a meaningful difference on every rung of the ladder. People struggle with having to call different numbers for hospitals, follow-up care, tests; with having to enter their information once at the primary care clinic, again at the specialist’s office, in the ER, for the MRI then for surgical procedure — instead of data following them. Then people get a bill from the doctor, hospital, MRI and the lab. It’s just this pile of papers that weren’t expected, explained or coordinated. How can hospitals let patients be more informed prior to care, where data travels with them?”
The liability shift from payer to patient and high deductibles. Providers are trying to figure out how to get paid by patients, and patients are trying to figure out how they are going to afford it. That is tension created by the payer, who increased the deductibles before the ACA. More people are insured, but more people are uninsured. There is a 70:30 payer to patient ratio for how money is coming toward [hospitals].
The second pain point is how hospitals are paid by insurance companies. What makes it difficult now is the payers are doing so much for the providers to get that 70 percent net revenue. You provide all the healthcare services to patients who have insurance, and you don’t get paid for it. If you don’t jump through all the hoops payers are putting up before you get to the point of service, you’re not getting paid.
Fifty to 70 percent of denials are preventable on the front end. We pretty much squeezed every drop of efficiency out of the back-end that we can. Front-end is by far the future of the revenue cycle.
– Paul Shorrosh, Founder and CEO
AccuReg Software, Mobile, Ala.
Jared Sorenson, Vice President of Revenue Cycle, 3M Health Information Systems (Murray, Utah): “Hospitals are challenged with revenue cycle efficiency, and it has planted the question: ‘Do we own our own revenue cycle or do we outsource it?’ It really comes down to what is the cost to collect. In the last 12 months, there have been several examples of health systems that have completely outsourced the entire revenue cycle to a third party. They have badged over up to 1,200 to 1,500 employees. They have looked at the cost to collect equation and said we are doing it at 5-6 percent; third party comes in and says I’ll do it for 4 percent. Hospitals are evaluating that strategic choice; outsourcing the revenue cycle is an entire strategy shift systems are grappling with.”
Jay Spence, Vice President of Healthcare Solutions, Kaufman Hall (Skokie, Ill.). “Health systems are having to measure things that affect financial performance today. How are we doing on the quality side? How do we focus on the consumer? The business is getting a little bit more complicated. We’re getting almost data paralysis. Are there ways we can start to take the data and organize it in the context … to reach our overall strategy? How do we make sense of it?
We’re trying to help health systems organize KPIs in the context of their strategic goals and objectives. Not just on the financial side, but on organization performance and other areas. We help them to create a framework … to manage KPIs and initiatives.”
Tom Schaal, Director of Product Management, MedeAnalytics (Emeryville, Calif.): “Disparate data sources. Everyone has this idea that data is really valuable, but it can be difficult to leverage that. The data is siloed. We focus on bringing data sets together, and doing a lot of data validation and consolidation. This allows hospitals to make more informed decisions across a bunch of different value areas. Our conversations tend be around how you can get value out of the data.”
Casey Williams, Vice President of Patient Engagement at RevSpring (Livonia, Mich.): “The biggest challenge we hear from hospitals is they’re expected to do more, but the way they’re engaging patients remains flats. They haven’t shape shifted the way they engage patients. From an industry standpoint, 15 years ago you expected everyone to pay balance in full. We still have this concept that all patients are the same, and they’re not.”
Jason Williams, Vice President of Analytics and Growth Strategy, Change Healthcare (Nashville, Tenn.): “Hospitals are focused on the revenue cycle, but I think a lot more attention is paid now to the continuum of the revenue cycle versus its pieces. We’ve seen with clients the influence of what a lot of industries have been doing for a long time — general customer experience. The patient satisfaction theme has shifted from what used to be a clinical focus to let’s make sure the experience wraps around the care. Your experience in the care setting may be anywhere from hours to days, but the experience with [payment] may be weeks before or months after. I see more emphasis on the arc of the experience. There is more recognition that we have to provide more of a quality user experience over that longer arc that surrounds the care incident.”