One Upgrade Too Many

January 14, 2021

As Peter Drucker so wisely stated, “Culture eats strategy for breakfast.”

Let’s be honest:  today’s rapid pace of Healthcare IT spending can quickly land otherwise healthy hospitals in the financial ICU in a hurry.   New trends, such as healthcare consumerism and evolving reimbursement keep leaders constantly looking to improve the financial health and competitiveness of their hospital. 

This drives healthcare software companies to create solutions, which drive their bottom line and in theory improve yours. So far so good.

However, in practice buying into the new latest software upgrade or IT implementation often sets hospitals backwards financially, for several quarters or more.  In fact, more than one hospital last year closed their doors, as a result of selecting the wrong system or biting off one upgrade too many.  

Making matters worse, some IT vendors have been known to present video as live demonstrations and failed to fully test all the electronic handshakes (EDI) between all of your payers and intermediaries.

Nevertheless, the typical system conversion is marked by a decrease in staffing productivity as a result of expanding “to do” lists, meetings, webinars, the building of dictionaries, testing and the like.  This inevitably dilutes from the fundamentals of cash flow.  System changes often take longer and cost more than anticipated.   This further dampens productivity and morale as people spend time functioning outside of their core competencies, stretching their expertise, adapting to rapid changes.  

What software companies do not tell you, is that many hospitals would be much better served by a visit to the “Genius Bar” to first confirm your organization is using “best practices” as it applies to your current systems.  

So Now What?

We know intuitively, if we are a couch potato, we would not benefit from simply joining a better gym or buying a lighter carbon fiber racing bike.  We would find a coach (i.e. an experienced third party) who would lead us through an initial assessment process and who would make recommendations with our goals in mind. We need to keep our culture front of mind.

Study after study (such as Kotter and Heskett’s landmark study) shows that companies that did not manage their cultures well missed out on stock price increases of 901% versus 74% – and net income increases of 756% versus 1% over an eleven-year period.

The healthcare revenue cycle and enterprise software solutions have always been complicated. However, hospital financial leaders who tend to focus on the ROI of their IT investments are often better served by an investment in the social cohesion and collaboration skills of their staff.  Ironically, this often involves having a bit of fun together by way of a transformational mentor familiar with the payers and systems of the organization, who is not trying to sell or implement more new things. 

Now back to the revenue cycle management which is traditionally separated by front- and back-end functions. The front-end of the revenue cycle is patient-facing. Front-end staff collect information from patients, confirm insurance coverage and eligibility, and register new patients.

Improving front- and back-end revenue cycle management collaboration helped a 25-bed community hospital in Illinois increase point-of-service patient collections by 300 percent, explained Rebecca Wright, Vice President of Strategic Planning at Iroquois Memorial Hospital.

 “The biggest thing I noticed was - and it’s not just here, it’s everywhere - the entire revenue cycle was a much-segmented process,” she said. “People only were familiar with their role, whether it was registration or scheduling or billing. They only understood what their role was.”

The segmentation resulted in knowledge gaps among revenue cycle staff. They did not fully understand how patient financial responsibility was calculated or what was actually needed to completely process a claim.

“In the past, it’s always been focused on back-end or business office and in collections, and we turned it on its head and looked at how we can push it more to the front-end,” she said. “Because we knew by pushing more of it to the front-end, we could reduce overall costs for our organization and make outcomes a little bit better.”

Shifting back-end functions to the front allowed staff to see where an account stood in the revenue cycle and anticipate possible payment challenges early in the process.

Simple changes like this, rather than one too many upgrades can have a dramatic and positive impact on a hospital’s revenue cycle.

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