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Four ways to improve hospital revenue

Most hospitals seek to improve revenue, but are challenged by static or declining patient volumes, reimbursement rate reductions and patient case reclassifications to comply with CMS regulatory requirements.

Revenue management efforts applied after the patient arrives (coding, billing, collections) have received the majority of investments historically, but have failed to produce sustainable improvements. The majority of denials, underpayments and recovery audit findings are linked to failure to comply with authorization and Medical Necessity requirements on the front-end of the revenue process (before the clinical encounter documentation).

Hospitals should focus on four proven methods that can improve revenue and constituent satisfaction this year.

1. Optimize revenue from physician referrals and orders. In most markets, hospitals compete for patients (physician order and referrals) among their active admitter physician populations. Notwithstanding the trend to hire/acquire physicians, in markets all over the U.S. perhaps half or more of the community physicians remain independent, split admitters. Smart hospital executives will provision them with tools to make it cheaper, easier, faster and more convenient to refer patients and order tests/procedures to their facilities making it as easy as possible to do business with their hospital. Smarter ones still, will link these capabilities with order capture directly from their EHRs, front-end revenue management and scheduling tools that electronically integrate or align such independent physicians without the need to hire them or buy their practices. 

2. Reduce out-of-network revenue leakage. Health systems have aggressively hired physicians and acquired physician practices. Beyond the hiring incentives and acquisition price premiums paid, incremental salary and office related infrastructure expenses now burden its income statement. Among the goals of such physician aggregation strategies is to “own” the source of future patient revenue. However, many hospitals have acquired practices without taking appropriate steps to limit or prevent out-of-network referrals (to competitors) and to optimize practice efficiency.

Enterprise HIT vendor applications provide advanced clinical documentation features, but fall short on capabilities required to coordinate care across a clinically integrated network, track and shape referral/ordering patterns and simplify front-end revenue functions such as ordering test and patient scheduling. These web-based capabilities are inexpensive, easy/fast to implement, integrate with existing workflows or technologies and result in fairly immediate returns on operating dollars simply by capturing patient visits now being lost to other institutions.

3. Reduce denials and underpayments. As conditions of reimbursement from Medicare, Medicaid and commercial payers become more stringent and further audit recovery programs are introduced, provider enterprises have significant financial exposure from failing to comply with Medical Necessity and related regulatory burdens. Payer compliance begins at the time of ordering in the physician’s office. Expert rules engines can electronically alert physicians to rapidly changing Medical Necessity requirements so that patient orders can be modified if necessary to conform to the complex array of clinical appropriateness and payer or condition-specific requirements. Associated documentation can be appended that reduces or eliminates denials and exposure to recovery findings that otherwise could substantially reduce revenue. This in turn reduces the need to spend scarce time and money on the back-end trying to collect revenue (or contest denials) with a low probability of return if the front-end process was not handled correctly.

4. Point of service collections. Today there are many tools that calculate deductibles, co-pays and patient payment responsibility prior to or during the clinical service. Healthcare providers that do not collect patient payment at or prior to the clinical encounter have a 40 percent probability of collecting the self-pay portion after the encounter. Not good. So, if you want to be paid on the self-pay portion, collect your money at or prior to service just like the airlines, online retailers and grocery stores do.

Joel French serves as Managing Partner and CEO for SCI Solutions, a provider of patent-protected revenue management solutions that enable clients to increase revenue and cash flow, optimize resources and physician referral patterns all while improving patient satisfaction.

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