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Laying the groundwork for a single billing office

Careful, upfront evaluation of an SBO’s pros and cons is an important first step in a change that requires as many as 2-3 years to plan and execute.

Johanna Epstein, Contributing Writer

As more health systems merge, consolidate and diversify, many organizations are looking to combine disparate hospital and physician billing offices into one single billing office.

One reason for this transition is the rise in new payment models that have started shifting the way hospitals and physician practices get paid. For example, bundled payments—which already exist for very complex diagnoses such as transplant and maternity services—are expected to become a common reimbursement methodology in the future.

To realize success with this model, an organization must determine the best ways to allocate the bundled payment so all parties receive appropriate compensation for services rendered. Having an SBO allows organizations some flexibility in assigning appropriate payments to the various parties involved in a patient’s care.

Another driver is the Affordable Care Act (ACA), which has created savvy healthcare consumers who are more involved in all aspects of their care—including payment—due to higher deductibles and copayments. An SBO allows a health system to consolidate patient statements from all providers and generate a more consumer-friendly bill. An easy-to-read and understand statement can improve patient satisfaction as well as the likelihood the patient will fulfill his or her payment responsibilities. Ultimately, this level of billing transparency can prevent patient leakage while also increasing patient payment.

The potential to improve operational efficiencies and achieve cost savings is yet another impetus for considering an SBO. By combining billing functions, an organization may be able to reduce duplicative administrative duties, cut down on supplies and resources and limit miscommunications between separate billing departments. Simultaneously, organizations can create more centralized customer service, which can positively impact patient satisfaction.

Setting the stage for an SBO

While an organization can realize substantial benefits from a centralized billing function, this approach is not for everyone. Moving to an SBO requires a significant investment of time and resources, and there is the potential for cultural upheaval as the migration takes place. Without proper planning, the transition could even result in less efficiency and decreased patient satisfaction, at least for the short term.

Organizations should consider the following steps before embarking on an SBO migration to ensure the ultimate outcome fully meets the health system’s needs and goals.

Evaluate the pros and cons. More than anything else, the organizational landscape and culture should determine whether switching to an SBO is wise. Consider areas such as current efficiency, patient satisfaction and revenue cycle performance to determine if improvement opportunities exist.

If the organization is already operating at a high level, it may be best to keep the status quo because an SBO offers minimal return on investment for organizations with existing high patient satisfaction scores and reimbursement metrics. Conversely, if there are opportunities to enhance efficiency and drive satisfaction, the cost/benefit ratio may be favorable.

During decision-making, it can be helpful to talk with peer organizations or consulting groups to gain first-hand insight into the consolidation process and potential advantages and disadvantages.

Create a formal governance and change management structure. If the organization decides to move forward, an important first step is developing the right governance and change management structure based on the organization’s appetite for change and existing or planned technology initiatives.

A key part of this effort involves identifying a visionary within the organization who can lead the charge. This person could spearhead the assessment of cultural issues in the billing offices, identify potential leaders who can facilitate the transition and gauge the organizational willingness to change. The optimal skill set for this champion includes deep revenue cycle knowledge, the ability to motivate staff and an openness to people, process and technology modifications.

Develop a strategic plan. The next step is to map out a detailed strategy for each phase of the SBO transition. First and foremost, the plan should outline how the organization aims to address cultural differences between professional and hospital billing functions, bringing the two sides together in a collaborative relationship. This may involve understanding the different technology systems, processes and billing complexities for both physician and hospital billing offices.

Additionally, the plan should incorporate robust cross training that includes both technology skills and change management training to help staff understand how they will interact with processes, payers and patients under the new model.

To keep the patient at the center of planning and implementation efforts, the strategic plan should detail how the organization will keep the transition and resulting billing function patient friendly, describing how the organization plans to create a single statement and offer greater transparency about costs and patient payment, such as via an online portal.

To guide the SBO migration, the strategic plan should include a timeline for internal and external changes as well as a communications matrix for sharing information with staff and patients before, during and after implementation. Recognizing most people are resistant to change, organizations may want to consider positioning the shift to patients as a way to improve their overall experience. For staff, it offers career development to make them more marketable internally and externally based on the opportunities provided by the new central billing office.

Satisfied patients, optimized payment

Careful, upfront evaluation of an SBO’s pros and cons is an important first step in a change that requires as many as 2-3 years to plan and execute. In virtually every case, migrating to an SBO necessitates a cultural change and full collaboration to successfully integrate professional services and hospital billing operations while better serving the patient.

Although an SBO may not be right for every healthcare organization, those that choose this path could see improved patient engagement and satisfaction and a revenue cycle that optimizes patient and payer payment.    

Johanna Epstein is vice president of management consulting services at Culbert Healthcare Solutions, a professional services firm serving healthcare organizations in the areas of operations management, revenue cycle, clinical transformation and information technology.

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