Last year was a tough year for many healthcare providers and their revenue cycle management (RCM) departments. Operational costs outpaced revenue growth leading to months and even quarters in the red. The American Hospital Association estimated that between 53% and 68% of hospitals ended 2022 in debt, up from only 34% in 2019. It’s unsurprising that 67% of healthcare leaders reported an increase in claim denials. Last year is being called the year of the audit, but healthcare finance leaders should be on guard that the increased pace and scope of audits are here to stay. The Revenue Cycle Management (RCM) departments that are thriving and decreasing their cost to collect are using Intelligent Automation (IA), especially Robotic Process Automation (RPA). Let’s dig into what exactly revenue cycle management automation can do for your healthcare organization.
Importance of Accuracy & Timeliness
The key to successful RCM operations is accuracy and timeliness. From tasks like credentialing and registration, patient statements and collections, coding, charge entry, and claim management, the data must be accurate, and the process must be followed quickly and efficiently. Demographic data entry errors early in the process remain with a billing department for months causing high touch claims that raise the number of days in AR. They also cause stress for patients. 53% of patients have expressed that they are more concerned about the billing experience than the quality of care they receive, and 93% agree that a poor billing experience can cost the provider the relationship. 34% of organizations that have engaged in automation have done so to improve the customer experience.
Intelligent Automation | Revenue Cycle Management Automation
Those thriving RCM departments utilizing Intelligent Automation have a suite of tools increasing their adaptability to changing regulations and a tight labor market. Intelligent Automation includes software such as Robotic Process Automation, Machine Learning, Artificial Intelligence, and Intelligent Character Recognition. While each of these tools has a place in the revenue cycle, it is best to start with the most basic – Robotic Process Automation. RPA utilizes software robots (digital workers) to replicate tasks and processes that humans do. Any rules-based process can be automated using RPA. These digital workers are available 24 hours a day, 7 days a week. They work faster than humans with a higher degree of accuracy. Digital workers can streamline and validate the data at the front end of the revenue cycle, ensuring a smoother journey to collection at the end through robotic process automation. Digital workers provide the accurate and timely work that RCM departments need to be successful.
Bringing Down the Cost-to-Collect
Using RCM automation brings down the cost-to-collect an average of .25%, according to a survey from the Healthcare Financial Management Association (HFMA). That equates to $250k in savings for every $100 million in revenue. It also decreases write-offs and revenue leakage by ensuring that every step is correctly followed.
For example, an acute care hospital system realized it had a problem. An average of 45 admitted inpatients a month had their charges written off because clinicals were not submitted, resulting in between $400k-$500k a month in write-offs. The hospital’s utilization management team tried several different strategies to mitigate the harm. Training, shift reassignments, and work queues in the Electronic Health Record (EHR) system, nothing moved the needle.
In eight short weeks, the process was analyzed, documented, and a solution was automated using revenue cycle management automation. The root cause of most of the missed submissions were patients admitted after hours when a utilization manager was not present and discharged over the weekend before the utilization manager returned, meaning they did not show up in the census. With the labor shortage, finding utilization managers to cover weekend shifts was impossible. A digital worker (bot) was deployed to run a daily census, ensure every patient had clinicals ready, and submit those clinicals and other documentation to the payers. The digital worker was then used to scan incoming documents from payers and monitor for acknowledgments, denials, and requests for additional information. Using the RCM automation, the organization got denials into their denial management system quickly enough to perform more peer-to-peer appeals, increasing their likelihood of success.
Labor Market Remains Tight
These are interesting times. While the economy displays several indications of a recession, the labor market remains tight (despite the Federal Reserve’s efforts ). Job openings remained unchanged at the end of 2022 at a near-record of 10.5 million. This is unusual but also exacerbates the challenge for providers as the price of labor continues to rise. Maintaining existing talent is important as the rate of employees quitting increased at the end of last year, driving the cost of acquiring new talent higher – when the talent is even available.
The challenge is even more real for RCM departments. An HFMA survey found the following average costs of recruitment and time to fill for roles in RCM:
- Senior-level (ten or more years of experience): $5,699, 207 days
- Mid-level (six to ten years of experience): $3,581, 153 days
- Entry-level (no experience required): $2,167, 84 days
Retail and dining are offering more competitive wages in response to the tight labor market. This is pulling individuals that might have become RCM team members into other industries. Gas stations now routinely offer $20 or more an hour for entry-level workers. The Kaufman Hall National Hospital Flash Report: November 2022 establishes a clear line between the labor shortage and revenue losses:
- “Hospitals struggled to discharge patients in October due to internal labor shortages and shortages in post-acute settings. The struggle to discharge patients led to a slight increase in length of stay. However, longer stays did not translate to additional revenue for hospitals.”
But they did lead to an increase in costs. If you saw longer hospital stays at the end of the year, sadly, you were not alone. Labor shortages and resulting revenue loss do not just impact hospitals. It impacts every provider trying to run an effective revenue cycle management program. Labor shortages are the leading cause of increased costs and lower collections. No surprise that the American Hospital Association is projecting that up to 64% of hospitals could end the year in debt.
Where to Start with Revenue Cycle Management Automation (RCM Automation)
Robotic Process Automation can be used in almost any department. Any rules-based repetitive process should be considered a process candidate for automation. Every practice is different, meaning that the best place to start also differs for each organization. While some organizations begin implementing robotic process automation with the early stages of the revenue cycle, others start in the middle cycle or late cycle because of staffing shortages or challenges related to their technology stack. The quickest way to determine the best path forward is to have an Automation Assessment by a qualified RCM automation analyst.
A few areas that UDig has found to be high in ROI (Return on Investment) include:
- Patient Scheduling: If your Percent of Patient Schedule Occupied (HFMA KPI PA-1) is less than 90%, this could be a high-impact place to begin.
- Referral Processing: Quick and timely responses to requests for care help offices beat the Three Delays Model. This not only ensures better care and outcomes for patients but also keeps the Pre-Registration rate (HFMA KPI PA-2) and Percent of Patient Schedule Occupied on target.
- Clinical Cleanup: Ensuring that clinicals are submitted in a timely and accurate manner leads to an increased Clean Claim Rate (HFMA KPI CL-1), lower Late Charges as a Percentage of Total Charges rate (HFMA KPI CL-2), and a lower Remittance Denial Rate (HFMA KPI AR-5).
- Payor Requirements Monitoring: Often, RCM departments do not notice a change in payor requirements until a spike of denials grabs their attention. A digital worker reactively monitoring claim success and proactively monitoring requirement changes leads to an improved Clean Claim Rate, Aged A/R as a Percentage of Total billed A/R (HFMA KPI AR-1), and a lower Uncompensated Care rate (HFMA KPI FM-4).
- Patient Preparation: 20-30% of colonoscopy patients are unprepared and thus cannot have the procedure. That means reduced compensation for the provider for a time when it is too late to rebook. Better-prepared patients can improve your Clean Claim Rate, Remittance Denial Rate, and Case Mix Index (HFMA KPI FM-5).
You Aren’t Far From a Solution
Revenue cycle management departments face a slew of challenges. Changing payer requirements, regulatory burdens, and a tight labor market make it harder to find RCM talent. These challenges are not insurmountable. You can thrive even in this environment. While there are many best practices and tools worth exploring, Intelligent Automation is a quickly deployed, low-code, scalable solution that decreases the cost-to-collect while increasing revenue capture. If you are interested in exploring revenue cycle management automation as a solution to revenue woes, reach out to UDig to find out more about our proven methodology to deliver high ROI fast.