Rethink Revenue Management to Overcome Challenges

2022 left most health systems and hospitals with negative or slim margins. 65 percent of hospitals will finish 2022 with a negative margin and most analysts are predicting a poor first half of 2023. Headwinds from labor and supply costs, tougher payment rules from payers, and unpredictable patient volumes are driving poor financial performance. 2023 will have a resounding theme of recovery with a major focus on expense management. A clear path to financial recovery will involve making some difficult decisions on operations and spend.

Numerous research firms have reported some recovery in finances for hospitals in 2022, while at the same time, margins have remained negative for every month in the year for most hospitals. Visit volumes have been below pre-pandemic levels as well, as FinThrive data has revealed that hospital visit volumes have remained below pre-pandemic levels for the majority of 2022. This, in combination of exponential labor and supply cost increases has placed organizations on their heels for financial sustainability. As rating agencies carefully evaluate the outlook for 2023 for hospitals, they are hesitant to prematurely provide indications that we are through the worst of it— in fact, they have indicated early 2023 may be one of the most difficult starts to the year for healthcare yet.

As organizations quickly ramp up their efforts to recover lost revenue, line-of-sight insights for recovery can be challenging. Many organizations leverage a myriad of vendors to manage revenue, as several healthcare organizations now have an average of 25-40 technology providers dedicated solely to various parts of the revenue cycle. Studies have shown that the more vendors in place to manage revenue, the more risk to recovery and higher risk for more denials. Multiple, siloed bolt on vendors leads to friction in revenue cycle and accelerates a health system’s financial challenges by contributing to recurring denials, underpayments, and high vendor management costs.

The revenue ‘cycle’ is broken— ask any leader in this space and they will tell you there is significant opportunity to improve. Areas such as cash flow, frictionless payment from patients and payer, as well as deteriorating relations with payers all are ripe for harvest. In the current state, transactions flow through a set of processes over and over. But this cycle, like a carousel, only goes in circles and is inefficient. There is a better way. Effective healthcare revenue management doesn’t need to recreate the cycle. To truly empower healthcare and help it realize its potential, we must break the cycle of inefficiency and rethink revenue management.

Financial leaders must shift their thinking to a new paradigm. Rethink the revenue management holistically to have longitudinal account level control of every transaction.

Collaboration between patient, provider and payer is needed to advance in this new healthcare economy. Hospitals and health systems must implement strategies to consolidate multiple vendors and focus on measurable improvements to compete in today’s rapidly changing healthcare market. Organizations should look to automate key processes and be as efficient wherever possible. A revolutionary, key performance indicator-based approach fuels holistic revenue improvement.

Rethinking revenue management involves a fundamental shift from the traditional cycle of inefficiencies in RCM. For example, health systems that use robotic process automation bots should be able to link that investment to saving the work of several people. It needs to be measurable. 

Let’s work smarter, not harder, and automate wherever you can. Intelligent automation is part of the revenue management solution of the future. There are dual benefits here as well in that the staff are doing the work that they got into the industry to do— the good stuff— patient facing. Staff will be more efficient and are morel likely to stay longer when mundane tasks are removed or streamlined so they can focus on what matters most— the patient. A win-win.

An automated, innovative core revenue management philosophy consolidates all data in one place for exponentially stronger analyses. A longitudinal data set— that cross-checks discrete revenue management elements— opens the door to a better understanding of what’s happening, where, how, and most importantly, what can be done to improve.

Today’s patients expect a cohesive digital experience. For instance, 79 percent of patients want estimates of their healthcare costs and 56 percent demand modern digital payment options. By unifying the front, middle, and back-end processes, patients enjoy a much more holistic experience that drives satisfaction and loyalty. Automation and analytics drive this paradigm, and your patients will thank you for it.

The patient is the new payer. The time is now for our industry to finally address issues of transparency and consumerism together. We have a choice – we can do it, or the government will do it for us. We are already seeing numerous landmark rules and regulations on transparency, surprise billing and others. As patients have more choices on where to go, they are going to vote with their legs where they can find the best clinical and financial experience. Frictionless access and payment are critical in the patient as payer paradigm. Patients are consumers who are not sick yet— and they want to shop and pay for healthcare like they do for any other good.

Healthcare organizations can’t afford to continue riding the carousel of revenue cycle management. 2023 will prove to be a test of all organizations; those that innovate and automate will be successful. It is time to rethink revenue management with a cohesive strategy that empowers organizations to move the needle on revenue management and patient engagement. When healthcare organizations no longer juggle a slew of disparate tools, and automate instead of recreating the process, better outcomes occur. A unified revenue management strategy not only improves the financial health of an organization, but the health of its community. Be bold in your approach and rethink revenue management. I’ll be watching.