“Shifting payment models and regulations are forcing hospital leaders to redirect previously launched budgets, priorities and strategic plans to assess if new RCM solutions can rescue them from imminent hospital layoffs, even bankruptcies," said Doug Brown, managing partner of Black Book Rankings, in a press release.
“Most hospital CFOs have no choice but to leverage next generation RCM solutions in order to keep their organizations solvent,” Brown added. “The reimbursement challenges ahead to get paid may require several new RCM applications, and the frank reality is that a failing RCM could quickly close a marginally performing hospital for good.”
Black Book surveyed more than 1,900 hospital CFOs, CIOs, business office managers, tech and financial staffers in April 2013 and August 2013. Additionally, the business managers of 1,800 physician practices owned by hospital systems also submitted responses, evaluated separately. There were 557 hospital and inpatient organizations represented in the survey.
Black Book estimates that the $2.4 billion hospital RCM software and services industry can expect double digit increases in 2014 because of the changes impacting hospitals, such as reimbursement and payment reforms, accountable care participation, ICD-10 coding challenges, physician practice acquisitions, collection issues and overall declining margins.
HIMSS Analytics found similar market trends this year. (HIMSS is the parent company of Healthcare Finance News.)
“There's a new future for revenue cycle,” said John Hoyt, executive vice president of HIMSS Analytics. It's time – past time – for replacement, he suggested.
“We're looking at ages 8 to 11 years for these revenue cycle systems," Hoyt said. "Patient billing is different from registration is different from scheduling, but they're generally up there: 8 to 11 years. And that's basically the kind of thing that the auto industry watches. How old are the cars on the road? There's a point at which people just have to start buying new cars."
Black Book’s research also discovered that roughly two-thirds of all U.S. hospitals that predicted in 2012 that they would replace their core RCM solution in 24 months had failed to initiate a sustainable RCM plan as of Q3 2013. Twenty-eight percent of hospital CFOs blamed the multiple clinical and technology projects underway organizationally for keeping their organizations from upgrading to comprehensive RCM solutions, although 88 percent of CFOs agreed their current RCMs need to be replaced.
Technology is not enough.
Optimizing information systems and educating staff on the ins and outs of managing revenue cycle are important, but not sufficient, for revenue cycle renewal said Bobbi Brown, vice president of Health Catalyst and a former hospital CFO.
To drive improvements in revenue cycle operations, Brown suggested that financial executives maintain convenient and caring touch points with patients; benchmark and trend data; mine that data to discover roadblocks; constantly ask the frontline for suggestions; and monitor all payer contracts.