Revenue Cycle is About More Than Just Cost. It’s About Patient Experience.

Indirect spend, or purchased services, represents a sizable chunk of a hospital’s operating expenses — in most cases, the number is anywhere from 20-25%.

Consider for a moment all the aspects that comprise indirect spend: There’s food, facilities infrastructure, human resources, information technology, insurance and support services, just to name a few. As you might suspect, it can get awfully unwieldy.

There’s also revenue cycle, which comprises roughly 3% of indirect spend. While it’s often viewed more in terms of finance, revenue cycle plays just as important a role in patient experience as these other facets. As health systems work to stay in the green and improve patient outcomes, gaining control over indirect spend is vital — and revenue cycle can be a particularly crucial, if sometimes perplexing, piece of the puzzle, says Pooja Solanki, Vizient senior principal, indirect spend.

“Revenue cycle,” she said, “is a critical lifeline for health systems.”

Read the discussion with Solanki below to learn more about providers’ biggest pain points related to revenue cycle, as well as some strategies and quick wins they can work toward in this space.

When it comes to revenue cycle, what are some of providers’ biggest pain points?

Healthcare organizations are seeing double-digit losses coming out of 2022. So, they're looking at revenue cycle management as their solution and asking, ‘Can we get better at this to drive the cash flow to sustain our business so that we can ensure the best patient outcomes? And what else can we do to be more efficient since we are seeing labor shortages?’ They're not able to find the staff to manage these processes and so sometimes they need outside help, like vendors and automation.

What are some of the best solutions to help providers tackle these pain points, particularly for those who are in the position to implement some higher-level strategies?

The same solutions they have used in the past are not going to work in today’s environment. We find that some of the cutting-edge health systems are realizing that they need to do what they do best, which is direct patient care, and so they are utilizing automation to drive some of the back fills that they're not able to fill in their revenue cycle labor force.

What’s also key is not looking at the cost of collection or the cost of replacing a headcount. It’s not all about cost, but about the performance of your revenue cycle. So, is automation really reducing your denials? Is it really improving the performance of your revenue cycle process? It's about looking at performance management and determining if you are going to get more bang for your buck. That’s what the cutting-edge health systems are doing.

For those providers who may not be able to implement those larger strategies, are there some “quick-win” areas they can focus on?

Often, the quick-win areas are in the front end of the revenue cycle process itself. A lot of times health systems are using their front office staff to collect patient copay at time of service. There's so much research that shows once the patient leaves, it's much harder to collect that copay. So, if you're able to, training your staff to maximize collections at point of service is really critical.

The other one we see is in that process of going through insurance verification of the patient and what is required by the payer in terms of prior authorization. It’s important to ensure all those steps are followed so that you have a clean claim to submit to the payer. That first clean claim reduces the chances of a denial or delays in payment by the insurance company. By using those process improvement principles, especially if it's your own staff, you can alleviate some of the error rates that are avoidable.

Also, when a patient leaves, a coder typically codes for that visit and says, "OK, this is what services were rendered." That code then turns into a claim that's sent to the insurance company. If you are not able to code fast enough — if you don't have enough capacity or enough staff — it leads to more cash flow issues because you're delaying your submission of the claim and delaying the whole cycle of getting paid by the insurance company.

By really focusing on your capacity, your capabilities and the quality of your coding, you can solve a lot of errors and delays in your cash flow. It’s not easy by any means, but these are quick wins that health systems can definitely focus on with their own staff right away.

Are there specific examples that come to mind when you think of providers you've worked with who have been particularly good at tackling some of these pain points related to revenue cycle?

One success story was with an academic medical center that was looking at self-pay collections. They had their own staff doing them, but we saw that their performance in collections was declining year over year. This health system was like, ‘You know what? We'd rather have our staff focus on other things that we know they could do better. Can we outsource this?’ By utilizing an outside vendor they were able to see millions of dollars in increased collections just in a year. For health systems that are struggling financially and completely in the red, you can imagine the type of financial impact this could have.

And remember that patient experience is really critical when doing self-pay collections. Revenue cycle is a critical part of the patient journey for the provider. It's not just about spend — it's about the top-line health of the hospital. So, I'm honored that health systems look to us for insight into some of those decisions to ensure they are able to effectively vet vendor options to help drive their financial sustainability without harming the patient experience.