RCM Blog Series – Part 1: Surviving Financial Storms
Hospitals and physician practices nationwide have seen a steady erosion of their revenues in recent years, with rural providers being particularly hard hit. In the first installment of this blog series on revenue cycle management, we take a look at the market forces affecting revenue cycle management.
Physicians New Role
It’s been said that physicians train to be caregivers – not business people. However, succeeding in today’s complicated financial environment might require an advanced degree in business management! The move to value-based care, shrinking reimbursements, increasing regulations, changing incentive programs and uncertainty around insurance payments continue to place a strain on physician practices – and their finances.
This volatile environment has created a need for close attention to financial best practices, beginning with patient check-in and extending through insurance denials and contracts. While the ultimate fate of the ACA marketplace is unknown, that lack of certainty has caused high turnover among insurance providers with changes in which healthcare providers are in-network.
Hospitals Financial Pressures
According to the NC Rural Health Research Program, there have been 83 rural hospital closures nationwide since January 2010. And there are more teetering on the brink of closure – and estimated 673, according to one report.
Cuts in reimbursement from private and public insurance are at the heart of this spiraling closure rate. In particular, facilities in states that have not expanded Medicaid are under more financial pressure, with 63% of hospitals vulnerable to closure.
A November 2017 Bloomberg article reveals that healthcare bankruptcy filings more than tripled in 2017. This is a contrast with other organizations in the broader economy, where bankruptcies have fallen since 2010.
Stormy weather – both literally and figuratively – plays a large role in these failures. Storms in Texas and Florida had a large impact on hospitals’ bottom lines, while upheavals in Washington DC around healthcare insurance led to uncertainty and fewer insured patients.
So what’s a hospital to do?
The Advisory Board announced in 2017 that hospitals are losing up to $22 million in revenue a year because they do not have effective revenue cycle management (RCM) in place. In particular, they pointed to the need to follow best practices in four key areas: denial write-offs, bad debt, cost to collect and contract yield.
In our next blog, we’ll look at some front-office best practices that address the rise in high-deductible health plans and self-pay patients.