Turning Around a Troubled Revenue Cycle

Accurate, efficient revenue cycle management is essential to maintaining positive cash flow in a healthcare organization.

Maintaining positive health care finances requires that claims processing and payments are effectively managed and that claims are "trackable at all points so issues can be addressed in a timely manner.

First, hospitals must learn what their issues are when they believe their financials are performing poorly. Is it the billing department? Is it medical records? Could the problem be charge capture?

Third-party payers can be major contributors to slowdowns in the healthcare revenue cycle. Medicare, Medicaid, and private insurers can effectively avoid paying claims by requiring perfect compliance with their individual requirements, and they frequently change those requirements, so what was perfect last year may result in a denial this year.

Other factors that negatively affect hospital accounts receivables include IT problems, lack of communication between revenue cycle departments, and inadequate training of personnel in the specifics of the healthcare revenue cycle.

To dramatically turn around poor or inefficient revenue cycle performance and increase cash flow, the triumphant management team must be able to implement well thought out solutions from planning and documenting an effective course of action. A good number of revenue cycle folks believe this but are not sure what to do first, then next and next and next and next.

Here are a few key steps you can take to reduce hospital accounts receivables (A/R) days.

• Determine goals for A/R Days for the facility The ideal number of A/R days varies depending on the type of facility and its specific mix of payers. Defining a goal for A/R days is step one to achieving that goal.
• Work toward timely, accurate documentation by ensuring timely and accurate documentation for coding and billing cases and adequate revenue cycle staffing, A/R days can be reduced. Reviewing transcription turnaround times can find inefficiencies that can be corrected, and having consistent communication with doctors on outstanding dictation can ensure timely completion of this critical process.
• Set "clean claim" goals. Make sure your coders and billers (or billing company) understand your expectations for clean claims. Set a goal of getting clean claims out within 48 hours of receipt of the required documentation. Also make your goals for follow-up on electronic rejections on uploaded claims crystal clear.
• Manage the claims denial process effectively meeting your goal for days in A/R is essential for keeping the healthcare revenue cycle on track.
• Ensure you have processes in place for tracking denials and that your personnel understand how denials are to be handled to minimize time to payment. Communicating the claims denial process as part of your revenue cycle staffing procedures can effectively reduce A/R days.
• Educate personnel on payer-specific policies to ensure that your personnel have access to training on requirements for Medicare, Medicaid, and major private insurers. Many payers have online access to policies as well as "webinar" style training for this purpose.

Conclusion

As hospitals deal with the ever changing financial environment, the billing and collections operations is one of the most crucial aspects of managing a healthcare business. Cash-starved health systems are generally the victim of a declining A/R turnover rate and a deteriorating A/R aging schedule.

Turning around a troubled revenue cycle is no easy feat. Most hospitals first need to determine precisely what is wrong with the infrastructure of their revenue cycle, and then construct a work plan that will achieve the necessary changes while maintaining cash flow in the interim.

When A/R ages to the point of no return, hospitals need to recover cash quickly and work down aging receivables.

Whichever road you decide to take during a revenue cycle turnaround attempt, remember that proper planning and allocating the right resources to produce maximum performance are the keys to any successful A/R turnaround effort.

When practices are implemented that effectively shorten the healthcare revenue cycle, the impact can be tremendous. By decreasing a payment cycle by only five days, cash flow can increase significantly and hospital accounts receivables can decrease significantly.