A Guidehouse analysis of a recent survey of health system leaders found that payer challenges, prior authorization, workforce, and cybersecurity are top revenue cycle stressors. Our analysis of the Healthcare Financial Management Association survey also forecasts health system investments in artificial intelligence (AI), automation, and managed services to improve revenue cycle performance over the next year. Here’s how those services can help your hospital.
Payer Challenges and Prior Authorization
Median days of cash on hand have dipped to a 10-year low for hospitals and health systems. The survey analysis revealed that nearly half of health care leaders reported a 93 percent or less net collection yield. Most executive respondents cited payer challenges as their top area of stress, with more than half flagging prior authorization as the second-highest cause of stress. Roughly 40 percent of respondents reported struggling with elevated fatal denial rates, and more than half of executives reported experiencing elevated Medicare Advantage denial rates.
Many payers have increased requirements for prior authorizations, leading to more denials and increased costs to collect, due to appeal activities. Moreover, leaders cited revenue cycle workforce shortages as the third highest area of stress, with 90 percent of executives reporting that labor challenges further exacerbated operations.
Solving Pain Points with Digital and Staffing Solutions
Between the complexities of reimbursement, denials, payment delays, and more, health care providers too often leave the revenue they have earned on the table. In the face of these pressures, industry leaders are turning to digital solutions and supplemental staffing to better navigate payer processes, maximize reimbursement, and boost returns.
Executives reported their highest priority for revenue cycle investment in the next 12 months is technology, such as AI, automation, and machine learning. Additionally, leaders cited automation as the second-most important strategy to mitigate revenue cycle staffing challenges.
Further, leaders cited consulting and outsourcing as the top strategies for overcoming revenue cycle staffing challenges. Nearly 80 percent of executives stated they use some form of revenue cycle outsourcing, and most of them (71 percent) are satisfied with their partnerships.
AI, Automation, and Risk Management
Research shows AI adoption alone has led to accelerated payment cycles, with payments processed within 40 days versus the standard 90. For one health system, conversational AI and intelligent automation reduced millions of dollars in payer denials and returned more than 2,000 hours of time to employees. To get the best results and return on investment when applying automation, AI, and machine learning capabilities to revenue cycle management, leaders should:
- Assess data and technology governance, cybersecurity, and quality
- Determine whether the application is appropriate for each user’s use case and patient population
- Identify metrics for validation, testing, measuring impact, and managing expectations
- Never lose sight of the human element
However, as enterprises more broadly adopt technology, leaders need to know how to navigate increased cyber risk. Attackers are becoming increasingly sophisticated, and nearly 25 percent of survey respondents reported cybersecurity as a key pain point — particularly notable, as a wave of ransomware attacks has infected the health care industry in recent months. Proven steps that can help prevent cyberattacks or minimize impact if an attack occurs include:
- Network segmentation: Isolating different devices and systems on separate networks
- Perimeter protection: A robust network monitoring protocol and intrusion detection prevention
- Training and education: Creating a culture of security involving clinical teams, front-end employees, and those who work on the revenue cycle
Consulting and Outsourcing Partnerships
Revenue cycle consulting and outsourcing partners can help health care providers achieve higher yield optimization so they can focus on the business of caring for patients. Successful outsourcing partnerships have enabled organizations to achieve final denial rates of less than 1 percent, accounts receivable days below 50, and a revenue cycle management staffing vacancy rate of less than 5 percent.
Outsourcing and managed services experts provide organizations a strategic upper hand by identifying scalable opportunities and areas of improvement and helping to create a customizable road map for successful revenue cycle management. Leaders should look for reliable managed services partners that can provide these benefits:
- Streamlined administration and efficiency: Less burden on staff to handle billing, coding, and collections, and fewer billing and coding errors and denials, translating to faster returns
- Cost savings: More efficient overhead, technology spend, and staff training
- Compliance: Improved compliance with current laws and regulations, lowering the risk of penalties and losses for compliance errors
- Cybersecurity: Continuous protection of critical assets to mitigate risks that can compromise revenue cycle performance
Case Study: The Steadman Clinic
The Steadman Clinic — a world-renowned Colorado orthopedic clinic specializing in the diagnosis and treatment of sports-related injuries for recreational and professional athletes — was navigating the changes of a growing practice. Clinic leadership determined that outsourcing revenue cycle management could help the practice reduce costs and improve reimbursements while allowing the clinical teams to focus on providing excellent patient care.
Guidehouse’s revenue cycle managed services and outsourcing team began a working relationship with The Steadman Clinic, which continued as the practice increased its footprint to five locations. This included:
- A more complex revenue cycle management system designed for multiple locations
- Integration with a new practice management system for maximum efficiency
- Identifying other opportunities for revenue enhancements
By creating a tailored physician revenue cycle outsourcing strategy, focused on accounts receivable management to improve cash collections and reduce days in accounts receivable, The Steadman Clinic increased monthly cash collected by 21 percent and decreased average accounts receivable days by 35 percent, achieving a clean claim rate that consistently exceeded 95 percent within six months.
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