The following content is an abridged version of a white paper published by Becker’s Hospital Review.
Technology advancement and industry shifts are driving more hospitals to adopt new strategic business models to protect their bottom line and maintain market share among financially agile competitors.
By 2018, CMS predicts 50 percent of its payments will be tied to value-based models, compared to 30 percent in 2016.
As government and commercial payers begin to impose outcomes-based contracts alongside fee-for-service payments, health care providers must optimize existing revenue cycle processes, while adding advanced and congruent technological capabilities to their financial wheelhouse. Developing advanced financial capabilities in-house, however, can be both cost-prohibitive and time-intensive.
This has forced hospitals and health systems of all sizes to the market in search of subject matter experts they can trust, who understand the complex demands of their business and can help drive down costs while increasing cash flow.
Historically, hospitals looked to the outsourcing market to reduce non-clinical operating expenses by enlisting temporary staff to perform the same tasks at a lower cost. For the revenue cycle, that often meant selecting the firm with the lowest cost-to-collect metric.
Yet, as the industry lingers between fee for service and value-based models, cost savings alone is no longer the No. 1 factor.
"Price will always be competitive, but it's no longer the driving factor behind financial services partnerships," explained Patrick Cobb, executive director of revenue cycle services for Cerner. "Today, the most desirable trait in a potential outsourcing partner is their level of expertise, skill specialization or the particular market they work in."
Sumner Regional Medical Center
Barry Harding took over as interim CFO and CEO of Sumner Regional Medical Center in October 2015, as the hospital struggled to manage daily revenue cycle operations.
Sumner experienced fundamental problems and inefficiencies in its billing department. A poor experience with a previous outsourcing partner slowed cash flow, impacted patient experience and harmed its reputation within the community.
"The previous [outsourcing] company was not very timely in billing statements, sometimes getting bills out to patients six months after services [were] rendered," says Harding. "This is a small community so that was a major issue for us. We had complaints from board members and city council leaders."
Sumner partnered with Cerner in January 2015 to engage its revenue cycle management services team. They worked together to build a tailored, strategic plan focused on streamlining processes and correcting inefficiencies. Cerner assumed responsibility for Sumner's patient financial services department, including claims processing, denials management, cash posting, accounts receivable (A/R) follow-up and account resolution. Cerner dedicated an off-site team of financial experts to manage daily tasks as well as identify opportunities for workflow improvements and solution optimization.
With Cerner as a part of the team, Sumner reduced its median days outstanding for A/R from more than 100 in January 2014 to 55 in May 2016. "We've actually seen a dramatic increase in cash-on-hand since we began our relationship with Cerner, simply because our billing of statements has become timelier," says Harding.
Timely billing operations also restored Sumner's reputation as a capable clinical and financial partner within its community. Patients are more likely to set money aside for timely bills as opposed to delayed medical statements they are not prepared to fulfill. "We've almost eliminated patient complaints coming into our billing department," says Harding.
Salt Lake City-based Intermountain Healthcare implemented Cerner's electronic health record (EHR) and patient accounting solution at two of its 22 hospitals in February 2015.
To prevent disruption of its financial performance throughout the conversion, Intermountain expanded their agreement to include Cerner's revenue cycle management services. Cerner experts in combination with other staffing modifications, helped Intermountain reduce the impact of the system implementation while hospital revenue cycle employees became accustomed to the new system.
Under the partnership terms, Cerner assigned an off-site team of about seven Cerner financial experts to support Intermountain's billing, collections and patient financial services processes. They also functioned as a resource for hospital employees who had a general idea of how to use the new system, but not to its highest capabilities. Cerner experts recommended alternative workflows which helped staff take advantage of the system's design.
Jeff Howes, assistant vice president of revenue cycle at Intermountain, also worked closely with Cerner to devise service line agreements and develop performance-based constraints. From initial negotiations and engagement through implementation, "the partnership has been relatively seamless and worked quite well for us," says Howes.
Each organization's financial needs are unique, particularly as the industry shifts to value based care and payment. There are several traits to consider when searching for the right financial services partner, including mutual accountability in the partnership; an exclusive team that supports your hospital; a partner that offers scalable services that can address both short- and long-term goals; and transparent communication.
Regardless, to succeed in today’s rapidly changing market place, health care providers will need to carefully manage their resources — and, decide whether it makes sense to perform a function in-house or entrust it to an experienced partner. With the right partner, financial services agreements like those at Sumner and Intermountain can alleviate resource strains, serve as an effective training model, and help improve overall performance.