These are the revenue cycle management trends to watch

After the financial struggles many health systems faced in 2022 — with operating margins negative for 11 consecutive months according to Kaufman Hall — the revenue cycle is in the spotlight in 2023. Health system leaders are turning to their revenue cycle experts to shape their overall strategies.

In this new year, the question becomes not just whether a health system can keep its doors open, but whether it can become profitable. Revenue cycle leaders are searching for ways to keep their organizations ahead of the curve. 

“If we want to continue to provide the best quality health outcomes to our patients and maintain profitability, we cannot look the same in 10 years as we do today,” Jamie Davis, Executive Director of Revenue Cycle Management at Banner Health, recently told Becker’s. 

The need for change brings rise to four key revenue cycle management (RCM) trends that are top of mind. 

Navigating a challenging regulatory environment

The regulatory environment isn’t getting any easier to navigate. While recent legislation like the No Surprises Act and the price transparency rule are leading to positive changes for patients, revenue cycle leaders end up juggling their way through a logistics problem: how to allocate staff to compliance on top of their other responsibilities.

Re-allocating staff is difficult when day-to-day revenue cycle responsibilities are so time-consuming and complex. Payer rules are always changing. A procedure might not require an authorization one day, but need authorization the next. 

The basic rules and regulations that underpin the revenue cycle are in flux, causing priorities and workflows to change rapidly. Not being agile enough in response to those changes could put the health system at risk of not being paid. 

“The increased focus on cost containment, value-based care, inflation, and pricing transparency will hopefully push payers and providers to move to a more symbiotic relationship versus the adversarial one today,” said Davis. 

Over the next 10 years, Davis hopes the relationship between payers and providers will become less tense.  Unfortunately, that world has not yet emerged.

The take-away? To be successful, revenue cycle departments must be agile and responsive to the shifting ground they walk on. Achieving that nimbleness is only possible when staff are freed up to focus on higher value tasks while automation takes care of the nuts and bolts of the work.

See how Care New England opened up staff time for compliance without hiring anyone new.

Working through revenue cycle staffing shortages

Clinical staffing shortages have gotten significant media attention, but administrative staff are also impacted. Many revenue cycle departments are understaffed and overworked. Existing staff rack up overtime and burn out, and some end up leaving for better pay and less stress in service and retail.

Finding trained, qualified workers is difficult. Revenue cycle staff must both internalize a complex set of rules, and be readily able to modify those rules in response to external changes. It is a unique skill set — not at all like other types of clerical work.

Hospitals face additional challenges, as revenue cycle departments often are not staffed 24/7. Many revenue cycle workers hold 9 to 5 hours on weekdays. Any Notices of Admission (NOAs) and authorizations that come in over the weekend then cause a mad dash on Monday mornings. It’s not uncommon for revenue cycle departments without support from automation to start out the week running behind.

It has become critical for revenue cycle leaders to start thinking about how to work smarter, not harder. Top of mind questions include:

• How can we extend staff capacity so we can complete all our work, with the people we already have?
• How can we better retain our staff?
• How can we improve and streamline our processes?

Learn how Fort HealthCare completed 2x the amount of work they were staffed for.

An increased focus on the patient financial experience

As healthcare costs have continued to rise, a growing percentage of the population is unable to afford their healthcare expenses, even with insurance. In fact, according to Pew Research, more than 4 in 10 people in the United States are considered to be underinsured. 

The number of self-pay or high-deductible patients has increased over recent years. According to CMS, out-of-pocket spending grew 10.4% to $433.2 billion over the course of 2021, accounting for 10% of our national health expenditure. This becomes even more troubling when you consider that only 43% of U.S. adults would be able to pay for an emergency expense of $1000 or more, per a 2023 Bankrate survey. 

Conversations with patients about finances are very sensitive and many healthcare professionals do not feel comfortable asking for payment, particularly in rural areas. But as soon as the patient leaves the building, the likelihood of receiving payment drops from 70% to 30% per a report from the Academy of Healthcare Revenue. 

Discover how Intermountain increased their copay collections by 300% within the first 3 months of offering digital copay collection.

Making smart investments to improve margins

To face all of the above challenges, healthcare leaders are aware they need to invest in tools that add value and give them a competitive edge sooner rather than later. Historically, health systems have invested in technology for back-end functions, but have found that fixing problems once they reach the back-end is not cost-effective and doesn’t resolve the root cause: the fidelity of the data being captured. 

“I don’t think AI has hit its tipping point in healthcare just yet,” said Dr. Robert Wachter, Professor and Chair of the Department of Medicine at the University of California, San Francisco (UCSF), in a recent episode of the Notable Perspectives podcast. “There’s certainly applications of it that are impressive, and the potential, obviously, is enormous. I think that has to happen in the next 10 years.” 

Dr. Wachter referred to AI-based tools as the next “megatrend” that will dominate healthcare due to competitive pressures and economic retrenchment. He said, “We can’t be spending this much wasteful money, so I think we’re going to need to use AI and AI-based tools to take the data, get smarter about it, and to some extent, replace human FTEs with systems that can automate certain processes.” 

For those reasons, many executives are focusing their revenue cycle management strategies around patient access, to capture data correctly the first time.

“Getting patient access workflows right really is the key to revenue cycle success,” said Lucy Sumner, Vice President of Revenue Cycle at Austin Regional Clinic, in a presentation at the MGMA MPE financial conference last year. “I don’t think anyone here would disagree that optimizing those front-end workflows reduces a huge number of headaches further down the revenue cycle.” 

Read more about Austin Regional Clinic’s outcomes with workflow automation. 

Focusing on patient access also allows health systems to better acquire and retain patients by offering them the digital experience that they want (75% of patients would rather complete their paperwork online). After all, patients don’t necessarily differentiate between their financial experiences and their clinical ones. Providing a consumer-grade financial experience that integrates into the rest of the patient’s care journey can increase copay collection and makes for happier, more engaged patients.

Of course, any potential partnership must begin with frank conversations about value. It’s important to align on metrics and projected value over time. With margins in need of improvement, options under consideration must provide clear short-term value along with a specific roadmap for longer-term improvement at scale. 

Learn more about Notable’s framework and how we drive value here.

Emerging from this unprecedented time, revenue cycle leaders face pressure to reimagine their strategies and help pull their organizations back toward profitability.