Revenue Cycle and Information
Technology
June 9, 2014
Learning Objectives
This session is intended to inform and educate MSHA students about Revenue Cycle
Management (RCM) and the role I/T plays within the Revenue Cycle. By the end of this session
you will:
1.
2.
3.
4.
5.
Understand more about Aspen Advisors and our perspective on the
market
Understand Revenue Cycle as both a series of processes and an
organization structure in a provider setting
Have insight into current and historic challenges within the Revenue Cycle
Understand how I/T helps (or sometimes hurts) Revenue Cycle
performance
Get tips for your Residencies specific to Revenue Cycle
ingenuity | intensity | integrity
Page 1
Personal Background
Kevin Ormand – Director
 Almost 20 years of healthcare administration experience, focusing on
revenue cycle management, finance and operations management,
strategic consulting, and project management.
 Proven track record of success at identifying improvement opportunities,
developing sustainable solutions to drive cash flow, maximizing
operational efficiency, and assuring regulatory compliance.
 MSHA (1998) , FACHE, PMP, and current student in Masters of Healthcare
Engineering program.
 Columbia, Columbia/HCA, Quantum Innovations, Children’s Medical
Center Dallas, Seton Healthcare Network, Phase 2 Consulting, Seton
Healthcare Family, maxIT-Vitalize/Leidos Health, Aspen Advisors (whew!)
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Page 2
About Aspen

Founded in 2006; steady growth over the past eight years
 Track record of success and demonstrated outcomes –
100% of our clients serve as references
 Over 100 associates nationwide; over 100 clients in 25+ states
 Strong KLAS ratings
–
–
Top 3 Overall Services Firm two years in a row
2013 ICD-10 Category Leader

2011, 2012, 2013 Modern Healthcare Top 20 Best Places to Work
 2014 Consulting Magazine Small Jewel
 Committed to education, research, and innovation
 Seasoned, senior-level engagement teams
– Balance of highly-skilled consulting practitioners, clinicians
and implementation experts
– Experience with community hospitals, academic medical centers,
integrated delivery networks and health plans
– Focus on facilitation, consensus-building and knowledge transfer
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Our Core Values
Page 3
Effective Revenue Cycle Operations
 A-player Rev Cycle
organizations optimize their
technology integration with
business process requirements.
 It is much more broad than just
business office operations.
 It touches almost every aspect
of patient care delivery!!
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Page 4
The Revenue Cycle is an interconnected
series of multi-disciplinary functions
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Page 5
Top 8 Priorities in the Hospital C-Suite*
Revenue Cycle
Revenue Cycle
Revenue Cycle
Revenue Cycle
Revenue Cycle
Revenue Cycle
Source: American Hospital Association's survey (April 2014) of more than 1,100 executives from health systems or community hospitals, "Building a
Leadership Team for the Health Care Organization of the Future."
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Page 6
Addressing Industry Priorities
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Page 7
The Glory Days of Revenue Cycle
Strategy…
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Page 8
Revenue Cycle Headlines
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Page 9
The Revenue Cycle Conundrum
Revenue Cycle Leadership Responsibility – Ownership of Operations,
Technology, Patient Experience, and Results:
Organization Pressures:
 Reduce cost to collect
 Increase cash flow
 Support a larger footprint in a growing and changing health system
 Respond to / adapt to regulatory updates
 Improve the patient experience
Market Response:
 Operations consolidation / regionalization
Options:
 Consolidate operations
 Outsource (fully or partially)
 Upgrade / replace existing technology
 Infuse new technology
 Reduce manual processes
 Process redesign
(Ascension, Bon Secours)
 Comprehensive outsourcing
(Conifer, Parallon, Accretive, etc.)
 New RCM vendor options (Epic, Cerner, Soarian, etc.)
 Continued bolt-on proliferation
 Increased patient expectations
(self-service, recognize me, make it less complicated)
Leadership Questions:
 How do I tie improvement initiatives to organization strategy?
 Outsourcing – what is the right balance?
 Am I getting the most out of my current technology?
 How do I evaluate what is on the market?
 Vendor options – Who can I trust? How do I develop trust?
 Where do I start, and how do I stay on top of this stuff?
Revenue Cycle Leadership Calling – the professional as a technologist, process engineer,
and entrepreneur… while maintaining financial subject matter expertise.
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Page 10
Our Perspective on Revenue Cycle
 Market pressures are driving macro-level

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change across the Revenue Cycle
Management landscape.
The voice of the customer continues to
drive revenue cycle technology
investment.
Constant trade-offs between core
revenue cycle vendors and bolt-on
technology.
Revenue Cycle operations are multidisciplinary.
New call for leadership: technologist,
process engineer, and entrepreneur…
while maintaining operational & financial
subject matter expertise.
ingenuity | intensity | integrity
Page 11
Market Dynamics
 Revenue Cycle operations have long been the focus of consolidation for the
achievement of economies of scale and information technology optimization;
recent large examples include:
– Parallon, Conifer, etc.
– Accretive Health, Cymetrix, etc.
 A 2012 study indicates that almost ¾ of all hospitals in the U.S. anticipate
either replacing their current Revenue Cycle platform or substantively
upgrading their Revenue Cycle system environment within the next two years.
– Large-scale change
– Bolt-on technology infusion
 Thus, the Revenue Cycle market is continually in a state of flux.
ingenuity | intensity | integrity
Page 12
A Few Cold Hard Facts…
Almost every healthcare
leader has skin in the
Rev Cycle game
 Effective Revenue Cycle operations are fully dependent on a true multi-
disciplinary team to execute seamlessly on requirements.
 No organization’s revenue cycle executes perfectly – it is technically
impossible to do so.
 The universal truth is that every revenue cycle operation has opportunity,
and Revenue Cycle Operations and Technology improvements represent
one of the few areas within the healthcare provider space where a
measurable Return on Investment (ROI) can be readily determined.
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Page 13
Potential Impact of a Well-Managed Rev
Cycle Improvement Initiative
Annual Net Revenue
3% Net Operating Income
Rev Cycle Engagement Cost?
Potential Annual Impact
New NOI
New NOI %
5 year gain
$
$
$
$
$
$
Hospital A
80,000,000
2,400,000
100,000
400,000
2,800,000
3.5%
2,000,000
Hospital System XYZ
$
500,000,000
$
15,000,000
$
300,000
$
2,500,000
$
17,500,000
3.5%
$
12,500,000
Health System ABC
$
1,000,000,000
$
30,000,000
$
500,000
$
5,000,000
$
35,000,000
3.5%
$
25,000,000
 It is reasonable to expect a 0.5% improvement to NOI as a result of a well-
managed Revenue Cycle Improvement engagement
 The rhetorical question is: “How much would you be willing to invest to
realize $xxM in ROI for the next 5 years?”
ingenuity | intensity | integrity
Page 14
The Flip-Side of the Paradox…
 Lack of awareness (or conversely, acceptance…)
– Many managers and directors are long-tenured contributors who promoted up
from the ranks over the years – they’re excellent at what is required to do the
job but not historically trained to be adept innovators and/or process
transformers.
– Incremental improvements have occurred already and they are
satisfied/celebratory
 They are simply swamped
– Competing initiatives
– Drowning in today’s pressure on operations
– Don’t think they can afford the time or the money
 They think they can do it themselves
– They don’t realize how much hard work it actually is…
– They don’t realize that the extra expenditure in the short-term can accelerate
the payback
ingenuity | intensity | integrity
Page 15
Revenue Cycle
How the Voice of the Customer is Driving
Revenue Cycle Technology Investment
Legacy systems support the core revenue cycle processes. The newer versions are starting to provide functionality to
replace bolt-ons. None of them provide a full revenue cycle solution for complex environments.
Siemens
Invision,
MS4, Soarian,
et al
Add-on Svcs.
Cerner ProFit,
et al
The Voice
of the Customer
The Basic Revenue
Cycle Process
Registration
Bolt-on
Technology
Meditech
Epic Financials
Enhancements
Consolidations
McKesson Paragon,
Horizon, RelayHealth, et al
Upgrades
Care Delivery
Discharge
Conversions
eCW, Next Gen, multiple
ambulatory options
Claim Generation
Payment Received
Emergency
Department
Unique account
is created/
upgraded
Rebill
Care delivery:
Ancillary, surgery
Inpt & Out pt
Bill dropped
Patient
discharged
Charge
generation
Direct Admits
Payment
variance
Denials
Encounter goes
to A/R
1. Do you have
insurance?
2. Can we help you
get insurance?
3. Are you eligible?
4. Is there an easier
way to get an
authorization?
5. What is the copay,
co- insurance, &
deductible?
Patient
Scheduling e-Fax Order Insurance
& Pre-Reg Repository Eligibility
Verification
Portal
ABN
Checking
Patient
Estimation
Document
Imaging
Forms
Registration
Automation
Verificaingenuity
| intensity
|Q/Aintegrity
tion
1. Did the data flow
accurately to the
bill?
1. Where is the
original order?
2. Is everything
signed?
Clinical Care Team
Charge
Capture
Analyzer
Charge
Reconciliation Tools
Case
Mgmt.
System
Encoder
Strategic
Pricing
System
Workflow Mgmt.
Document
Imaging
Request of
Information
Portal
1. Is there an easier
way to work these
errors?
2. Why didn’t they
1. What is the error
fix this sooner?
rate?
2. How are we
doing?
3. Why is it taking so
long? What is the
status of the
claim? Are we
collecting what
we should
4. We need to do
better with fewer
people.
Contract
Mgmt.
Write-offs/
adjustments
100%
payment?
Transfers
1. How do I know that I charged
1. Why don’t they
everything I was supposed to?
remember me?
2. Already provided 2. Did my charges post?
this information.
3. What is this
going to cost
me?
Appeal?
Clean claim
submitted
Bill edits applied
Contractuals
applied
Code entry by
HIM DRG/CD-9
ADT transmission
sent to ancillary
systems
Demog.
Account Closed
Clinical
documentation
Scheduled/ Preregistered
Electronic
Authorization
Replacements
CPSI, APS, HMS
Other small
community
hospital vendors
Claims
Scrubber
Financial
Assistance
Screening
Charity
Workflow
Processing
1.
2.
3.
4.
Zero-balance
account is closed
I don’t understand my bill.
I need my medical record information.
Why don’t they remember me?
Can’t I do this online?
1. I need help managing my payer
denials / RAC audits/ etc.
2. Why is there so much manual data
entry?
Patient
Electronic
Cash
Posting
Vendor
Mgmt.
Portal
Patient
Statements
Audit
Mgmt.
Patient
Portal
Payment
Rev Cycle
Variance & Dashboard
Denials
& Analytics
Mgmt.
Document
Imaging
Claims
Statusing
Workflow Mgmt.
Page 16
Information Technology Across
Revenue Cycle Landscape
Patient Access
(Front-end)



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
Centralized scheduling and/or
pre-registration
Forms automation
Registration quality assurance
Productivity modeling
Upfront eligibility/authorization
and patient responsibility
estimation
Portal / kiosk design,
development, and
implementation
Financial counseling/assistance
Demographic verification









(RVR) Assessment Strategy, System
& Optimization Selection, & TVO
ingenuity | intensity | integrity
Patient Financial
Service
(Back-end)
Revenue Integrity
(Middle)
Charge Description Master (CDM)
optimization
Centralized charge capture and/or
reconciliation
Revenue integrity monitoring / bill
analyzer
Regulatory update assessment and
implementation support
RAC audit support
Clinical Documentation
Improvement (CDI) programs
Discharge Not Final Billed (DNFB)
improvement
Case management
Strategic pricing

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Workflow automation
Claims scrubbing/edits root
cause analysis
Electronic claims status and/or
cash posting
3rd party vendor automation /
monitoring
Denials management programs
Financial assistance adjudication
Under payment monitoring
Contract management
Call center management
Patient Portal development
Implementation Program Management,
ICD-10 Planning, Impact Analysis on
Planning
Implementation &
Execution, Risk
Clinical Systems
Value Realization
Mitigation, Forensics
and Workflow
Page 17
Elements of the Rev Cycle Value
Realization Maturity Model
Level 1:
PRODUCTIVITY & QUALITY
Minimal focus on
technology infusion,
process standardization, or
best practice attainment.
Technology is typically
disconnected and siloed.
Level 2:
Vision and plan in place to
drive performance
improvement, increased
cash flow, and improved
patient experience..
Technology infusion /
replacement may be
planned or in process.
Mature process and
technology integration
developed across and
within all functions of the
revenue cycle.
Sophisticated revenue
cycle process integration
at all levels of the
organization
Value is expected
Streamlined access & real-time
eligibility
Regional centers of
excellence
Documentation-driven
charging and coding
Centrally chartered performance
improvement projects
Increased patient self-service
Training addresses needs
More complex revenue monitoring
New technology enabling PI
Scheduling and pre-reg
efficiencies in some areas
LOW
Level 4:
Level 3:
RISK & WASTE
HIGH
Analytics capabilities enhanced
Processes are established to manage
and measure metrics and KPIs
Productivity and process
efficiency is low
Large backlog of errors
Low standardization and high
decentralization
LOW
FOUNDATIONAL
ASPIRATIONAL
PROFICIENT
TRANSFORMED
HIGH
PEOPLE, POLICIES, TECHNOLOGY ADOPTION
ingenuity | intensity | integrity
Page 18
Recent Revenue Cycle Assessment
Success Story
 Opportunity: Hospital had its first non-
profitable year on record:
– Clinical redesign in process
– System / technology review already
completed
 Hospital Revenue Cycle key performance




indicators spiraling out of control.
Key leaders either on the way out or
aware of the hot seat.
Objective analysis/assessment requested
by corporate leadership.
Two month assessment included data
analysis, interviews, and process
observations for Root Cause Analysis.
12 prioritized recommendations
identified, including high-level critical
path for implementation.
Would you spend
$35K in consulting to
identify $3.9M?
ingenuity | intensity | integrity
 Total implementation time & cost:
– 2 month consulting engagement
– Total consulting costs = $35K
 Value Proposition: Targeted bad debt and
other expense reduction, plus net
revenue enhancements = $900K
annually.
$3.9M Positive NOI Impact over 5 Years
$1,000,000
$800,000
$600,000
$400,000
$200,000
$Year 1
Year 2
Year 3
Year 4
Year 5
NOI Impact
Page 19
Recent Optimization/System
Selection Success Story –
Front-end of the Revenue Cycle
 Opportunity: Multi-hospital health
system in acquisition mode:
– Aggressively searching for ways to optimize
its current environment to grow capital for
acquisitions
– Cerner EHR and Siemens Invision Rev Cycle
 Data analysis identified that while bad
debt as a % of net revenue was flat, the
dollars associated with patient
responsibility had grown from $12M to
$36M annually.
 Recommendation:
– System Selection for bolt-on that improves
electronic eligibility verification and Patient
Responsibility estimation with workflow
management included.
– Business process redesign to optimally
integrate new technology.
Would you spend
$450K in consulting to
get $13.1M?
ingenuity | intensity | integrity
 Total implementation time & cost:
– 6 month consulting engagement
– Year one consulting and implementation
support: = $450K
– Subsequent years = $225K in annual fees
 Value Proposition: 10% reduction in
patient responsibility bad debt in first 12
months of deployment.
$13.1M Positive NOI Impact over 5 Years
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$Year 1
Year 2
Year 3
Year 4
Year 5
NOI Impact
Page 20
Recent Optimization/Redesign Success
Story – Middle of the Revenue Cycle
 Opportunity: Multi-hospital health system
 Total implementation time & cost
facing intense financial pressure:
– 9 month initial consulting engagement
– Recent reduction in workforce
– Year one consulting and implementation
support: = $750K
– Past success hid broken processes
 Data Analysis identified that incredible
disparity across like services and sites for IV
infusion and injection charge capture.
– Subsequent years = $225K in annual fees
 Value Proposition: $38.5M in sustained
incremental net revenue by year 3.
 Recommendation:
– Develop and implement a centralized charge
capture team.
– Redesign/standardize technology and forms
for optimal documentation, charge capture,
and reconciliation.
– Business process redesign to optimally support
clinicians (alleviate workload, ensure balance
of managerial oversight).
Would you spend
$750K in consulting to
get $125M?
ingenuity | intensity | integrity
$125M Positive NOI Impact over 5 Years
$40,000,000
$30,000,000
$20,000,000
$10,000,000
$Year 1
Year 2
Year 3
Year 4
Year 5
NOI Impact
Page 21
What to look out for in your
Residencies
 Understand what a patient encounter is from start (scheduling/pre-reg) to
finish (zero-balance account).
– Flowchart the process of who does what, when, and where
– Identify your own process pain points (possible cash aneurisms?)
– Who are the customers of the revenue cycle process at each step?
 Learn what Revenue Cycle KPI’s are on the CEO’s dashboard, and then drill
down to the CFO, the VP of Rev Cycle, the Rev Cycle Department Directors,
etc.
– Understand connections between lead measures (e.g. % possible upfront
collections) and lag measures (e.g. bad debt associated with patient
responsibility).
 Build your overall Revenue Cycle understanding (see next few slides).
ingenuity | intensity | integrity
Page 22
Questions from Revenue Cycle
Stakeholders
CFO
VP of Rev Cycle
Rev Cycle Director
• Can you reduce my cost to collect?
• Can you help me integrate disparate
systems?
• Front-end: Can you help me optimize
upfront collections? Improve our preauthorization process?
• What can you do to help me accelerate
cash?
• Can you improve my bottom line?
• Can you help me identify, correct and
reduce errors at the furthest point
upstream?
• Can you help me recoup my costs from
our EHR implementation?
• Can you show my staff how to better
use the tools they have?
CIO
• Can you help automate workflow?
• Can you help optimize the revenue cycle
technology environment?
• Middle: Can you help me optimize
charge capture? Decrease coding lag
days?
• Back-end: Can you improve clean claims
percentages? Improve my denials
management performance?
Physician Practice
Administrator
• Yeah… what they said…
• Can you help me find cash to fund my IT
Capital Budget?
ingenuity | intensity | integrity
Page 23
Revenue Cycle Management –
Market Competitors
 Major consulting firms that offer a broad suite of revenue cycle consulting




services and (more and more) their own proprietary technology: e.g.
Deloitte, Huron Consulting Group, PwC, Advisory Board Company.
Outsourcing companies that take over the entirety of the revenue cycle
operations: e.g. Conifer, Accretive, Parallon, OptumInsight.
Major Core vendors with consulting arms: e.g. Siemens, Cerner, McKesson.
Bolt-on technology vendors: Over 100 players in this space offering more
nimble opportunities to bridge gaps where Major Vendors are less effective
and to respond to growing customer (provider, patient, payer)
requirements, e.g. MedeAnalytics, MedAssets, SSI, HealthWare Systems,
JDA eHealth.
Small boutique consulting firms that specialize in either a market niche
(e.g. Home Health revenue cycle) or a single area of focus (e.g. Charge
Description Master maintenance and optimization).
ingenuity | intensity | integrity
Page 24
Industry Jargon
 A/R Days
 Accelerate Cash Flow
 DNFB and DNB
 Reduce Bad Debt
 Front End / Patient Access
(Scheduling & Registration)
 Timely Filing
 Middle (Coding & Revenue Integrity)
 ICD-10 CM / ICD-10 PCS
 Back End (Billing & Collections)
 POS / Upfront Collections
 Cost to Collect
 Compliance / Regulatory / CMS
 Days Cash on Hand
 Ancillary Departments
 P4P
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Page 25
Key Revenue Cycle Phrases
 Operating margins are near zero/loss
 Unprofitable service lines
 Revenue loss
 Manual processes and /or tools
 Days in Accounts Receivable (A/R) are
 Workflows not integrated









rising
Write-offs increased
Denials are up
Bad debt increased
Increased number of patients without
insurance or with high deductible
Cash collection rate decreased
Reimbursement decreased
Profit margins are negative
DNFB is rising
Lost charges
ingenuity | intensity | integrity
 Upcoming system implementation







and/or upgrade
Unsuccessful system implementation
(i.e., HIS, EMR, EHR)
Project over budget
Little to no involvement in EHR
Implementation
Patient satisfaction decreased due to
revenue cycle processes
Not prepared for ICD-10
Lack of reporting or tools
Rising expenditures
Page 26
In Summary
1.
Understand more about Aspen Advisors and our perspective on the market.
– Aspen history, perspective on the RCM market
2.
Understand Revenue Cycle as both a series of processes and an organization structure
in a provider setting.
– Comprehensive requirements for Effective Revenue Cycle Operations
– Front, middle, and back (and many points in between!)
3.
Have insight into current and historic challenges within the Revenue Cycle.
– Revenue Cycle Operations and Technology improvements represent one of the few areas
within the healthcare provider space where a measurable Return on Investment (ROI)
can be readily determined.
– Consolidation, competing initiatives, lack of understanding
4.
Understand how I/T helps (or sometimes hurts) Revenue Cycle performance.
– How the VOC is driving Revenue Cycle technology investments
– Information Technology Across the Revenue Cycle Landscape
– Elements of the Rev Cycle Value Realization Maturity Model
5.
Get tips for your Residencies specific to Rev Cycle.
– Rev Cycle I/T market competition, success stories, Residency pointers
ingenuity | intensity | integrity
Page 27