Reducing Revenue Leakage: The Hospital CFO’s Guide To Navigating Business Growth and Expansion With Ease
By InlandRCM
In today’s increasingly competitive healthcare marketplace, successful healthcare organizations pursue an array of innovative growth strategies to improve patient care quality: Merge with other health systems, acquire independent physician practices, and launch new service lines are just a few. However, with each strategy comes the potential for revenue leakage as clinicians and staff embrace operational changes. Healthcare leaders work diligently to close financial gaps; however, the reality is that earned revenue may end up slipping through the cracks during times of business expansion even despite their most valiant efforts.
This how-to guide provides six of the most common reasons why revenue leakage occurs during these vulnerable times of transition and provides actionable steps chief financial officers and other healthcare financial leaders can take to ensure revenue integrity.
1. Hospitals overlook—and undervalue—the patient intake process.
As healthcare organizations pursue one or more growth strategies, a surge of new patients into the health system often requires a renewed commitment to improve the patient intake process. Without this commitment—and a budget to support it—organizations may easily leak revenue as demographic and insurance errors increase avoidable claim denials.
To do:
Evaluate novel technology solutions to automate portions of the patient intake process. For example, this may be an opportune time to invest in self-scheduling options, check-in kiosks, or mobile patient check-in to reduce data entry errors and augment staff capabilities.
Explore outsource partnerships to improve patient intake accuracy and efficiency. These partnerships may be essential when organizations experience high staff turnover rates or are unable to sustain adequate staffing levels during the expansion and beyond.
Perform ongoing audits to identify and address front-end revenue cycle vulnerabilities. Then provide corrective education and re-audit.
Standardize patient intake workflows using enterprise-wide policies and procedures to reduce variation and promote accurate and consistent data capture.
2. Inefficient prior authorization workflows prevent timely compliance.
With new services (and new payers) comes the potential for new prior authorization requirements. Without strategies to ensure timely compliance, denials may skyrocket. For example, imagine launching a new outpatient diagnostic test or digital service only to realize a month later that certain payers won’t cover it without prior approval. During that month, countless services are provided, and thousands of dollars lost.
To do:
Create payer- and plan-specific prior authorization cheat sheets for new services and new payers.
Educate clinicians about prior authorization requirements.
Explore artificial intelligence-enabled prior authorization to boost efficiency, reduce costs, and decrease denials.
Leverage electronic health record (EHR) system alerts to avoid accidentally submitting claims without a required prior authorization.
Sign up for payer newsletters to stay on top of prior authorization-related changes.
3. Credentialing errors and bottlenecks go unaddressed.
As healthcare organizations grow, credentialing new providers must be part of a proactive strategy to prevent revenue leakage. Streamlined credentialing workflows also mitigate patient access challenges; helping organizations avoid fines, penalties, and exclusion from federally funded programs; and avert medical malpractice lawsuits. These workflows ensure new providers are of the highest quality and can begin seeing patients as quickly as possible. Each additional day required to complete the credentialing process equates to thousands of dollars of lost revenue because clinicians can’t bill for services rendered. This is in addition to salaries already being paid to employed physicians.
To do:
Begin the credentialing process as soon as new providers sign an employment contract.
Consider outsourcing all or a portion of the credentialing process to improve efficiency and accuracy.
Create payer-specific provider credentialing checklists.
Develop state-specific provider credentialing checklists if your health system spans multiple states.
Explore credentialing software to track and trend all stages in the provider credentialing life cycle.
Use primary source verification or approved-equivalent sources when credentialing providers.
4. Disparate clinical documentation and coding practices compromise data integrity.
Without accurate and complete medical codes—and the clinical documentation to support them—healthcare organizations inevitably leak revenue. New services for which there are no documentation and coding guidelines are particularly vulnerable to errors; however, these errors can also occur when multiple healthcare organizations with different internal coding guidelines, documentation nuances, and medical coder abilities come together under one corporate umbrella.
To do:
Closely monitor denials and key performance indicators, such as days in accounts receivable, net collection rate, and clean claim rate in the short- and long-term.
Conduct ongoing audits—particularly of new service lines and new providers—to identify and address underlying problems and prevent revenue leakage.
Consider outsource partnerships to address staffing shortages, improve coding accuracy, reduce discharge-not-final billed accounts, or increase efficiency.
Contact payers to understand coding and documentation requirements for new services.
Create a standard onboarding process for clinicians enterprise wide to introduce them to basic revenue cycle processes and expectations.
Create a standard onboarding process for medical coders enterprise wide to introduce them to facility-specific coding guidelines and expectations.
Standardize coding policies, guidelines, and workflows to promote compliance and streamline efficiency.
5. No oversight of payer contracts leads to payment errors.
As healthcare organizations expand into new geographic regions, they often have more leverage when negotiating with payers. However, the potential for payments errors remains a threat to revenue integrity that only grows commensurate with the number of contracted payers.
To do:
Compare actual payments with contracted amounts using payer fee schedules loaded into the EHR.
Contact payers when underpayments occur and appeal if necessary.
Partner with an outsource vendor that can monitor and address underpayments, when needed.
6. Patient experience becomes a secondary priority.
Without proper planning and change management, healthcare mergers and acquisitions may cause operational breakdowns that negatively affect the patient experience. When this happens, patients act by seeking care elsewhere, delaying payment of their medical bills, or voicing frustration through online reviews. The outcome for healthcare organizations? Direct and indirect revenue leakage.
To do:
Engage patients with transparent and empathic communication. This requires highly skilled call center agents, revenue cycle staff, and outsource partners.
Invite and address patient feedback.
Implement process improvement strategies based on what patients want and need.
Looking ahead
During times of business growth and expansion, it may be tempting to passively reap the rewards of top line revenue. However, in doing so, healthcare finance leaders might not realize revenue leakage quietly undermines their efforts. It’s critical to monitor key areas and consider and/or outsource partnerships to protect revenue integrity and accomplish strategic goals.
Sidebar: ‘Prime times’ for revenue leakage
Revenue leakage could be an evergreen problem at your healthcare organization, but it may be even likelier to crop up if you’re engaged in any one or more of the following growth strategies:
Collaborate with other healthcare facilities to cut costs and streamline care.
Expand facilities to accommodate new and existing patients, aging populations, and outdated infrastructure.
Launch new service lines to attract and retain patients.
Leverage sophisticated digital and virtual health services to expand reach.
Merge with or acquire other healthcare providers to broaden service offerings, better serve patients in their own local communities, or gain leverage during payer contract negotiations.
Sidebar: Did you know?
More than 700 rural hospitals– over 30% of all rural hospitals in the country– are at risk of closing because of serious financial problems. More than half of these hospitals are at immediate risk of closing because of the severity of their financial problems.
Identifying and addressing areas of revenue leakage is an important step in promoting financial sustainability.
Source: https://ruralhospitals.chqpr.org/downloads/Rural_Hospitals_at_Risk_of_Closing.pdf