Mike Miliard is Managing Editor at Healthcare IT News. Mike covers topics such as health information exchange, privacy and security, analytics and ICD-10. Follow Mike on Twitter @MikeMiliardHITN.

Revenue cycle ripe for radical change

“I’m surprised that we continue to see the status quo in revenue cycle management,” says Sean Wieland, managing director and senior research analyst at Piper Jaffray.
“Healthcare is the only industry that has a revenue cycle with a designated subsector of companies that manage it,” he explains.
Worse, “It costs 20 to 30 cents on the dollar to cross a trade in healthcare – to take the money from the buyer of healthcare, the self-insured employer, and put it into the pockets of the providers of healthcare,” says Wieland.
“If any other industry had a revenue cycle like that, we’d all be living like the Amish,” he says. “Wall Street crosses a trade for fractions of a penny.”
There’s an “enormous opportunity” to take costs out of the process “by actually fixing the revenue cycle,” says Wieland. “And by fixing I don’t mean by incremental process improvements. I mean blowing it up. And really rethinking the process of how we go about getting doctors and hospitals paid.”
Given all the advances in health information technology over the past decade, it’s disheartening that the “kabuki theater we call revenue cycle is still happening today,” says Weiland. “But I think over the next 10 years we’re going to see some radical improvements.”
On the ambulatory side, “I’m looking at companies that provide disruptive technologies in revenue cycle to really change the landscape there,” he says. “Namely athenahealth.”
On the inpatient side, “what’s going to force that change” is health systems vertically integrating risk into their models, says Wieland. “Taking that risk from the payers and putting it on their books, by definition that disrupts the revenue cycle because there won’t need to be one. The premium dollar will go to the health system and they’ll have to manage that cost.”
In the meantime, it’s clear that healthcare organizations are dissatisfied with their RCM options. And any changes in the near future do look to be incremental.
KLAS released a report this past month titled, “2013 Revenue Cycle Perception – Providers’ Wish List: Integration, Single-Source, Reform.”
That last word is telling. As healthcare enters its patient-centered, payment-bundled era, hospitals and physicians are looking for a shakeup.
“RCM integration with both inpatient EMR and ambulatory EMR/patient accounting is at the forefront of their minds as most look to establish an enterprise-wise revenue cycle strategy that supports today’s value-based models of care including things like episode-of-care billing, family billing, and bundled payments,” writes the report’s author, Lois Krotz, strategic operations director at KLAS.
While such a holistic approach to integration is critical in most providers’ opinions, few RCM suites are able to offer it, according to the study.
For instance, 77 percent of providers “believe patient accounting and practice management integration is important and critical to their revenue cycle environment,” but just 14 percent of vendors offer the capability.
“Cerner, Epic, GE, and Siemens all have integrated PA/PM solutions, but adoption levels and experience vary,” she adds. “LSS is not integrated but rather is tightly interfaced with MEDITECH, with high satisfaction. McKesson and Allscripts don’t currently have integrated PA/PM offerings.”
According to KLAS, 78 percent of providers say inpatient EHR integration is their key concern; 41 percent say it’s ambulatory integration.
And to judge by the revenue cycle directors interviewed for the report, many of them are unhappy, and aren’t holding out much hope for a positive change..
“The integration and functionality we get with our current solution is terrible, and there isn’t a viable solution in the near future for us to consider,” says one. “We lack the overall confidence that our vendor can pull things off and offer a workable solution, which has pushed us to look elsewhere.”
“With all the ICD-10, accountable care, and other changes coming, we know something needs to change here,” says another.
That’s a sentiment that was echoed by John Hoyt, executive vice president of HIMSS Analytics, in the June 2013 print issue of Healthcare IT News.
“There’s a new future for revenue cycle,” he said. “We’ve been nipping away at trying to save money in Medicare for years, but we need fundamental change, and we all know it. And it’s coming in the form of ACOs or bundled payments and this type of thing.”
Put simply, said Hoyt, “The revenue cycle systems we’ve had, for the past 10 years, are not prepared to do that.”
New capabilities are on the way. But not just yet.
“The vendors are telling us that they’re preparing, and they’re looking at revenue cycle redesigns to take into account bundled payments and ACO reimbursements,” said Hoyt. In the meantime, most providers have other things to invest in before they splurge on next-generation RCM systems, he said. “They’re not going to buy them until they’ve gotten all they can get out of meaningful use.”
After that? “We think there’s going to be a boom”

[See also: RCM market expected to grow by leaps]