Kaufman Hall predicts hospital operating margins will fall 80% below pre-pandemic levels by the end of 2021. Projecting cash flow always has been a challenge, but now that hospitals are operating on extremely tight margins, access to accurate projections is critical.
On a related note, research from Market cube and Waystar found that fewer than half of respondents (43%) understood their most recent medical bill, and it’s a major reason why they have paid their bill late.
Help from IT with financial information and revenue cycle management, it seems, has never been more important. To dig into these topics, Healthcare IT News interviewed Diana Allen, CEO of the SSI Group, which markets a revenue cycle management solution for providers and payers. Allen’s expertise can help healthcare leaders with their pressing financial questions.
- To handle the impact the pandemic is having on revenue, you believe prediction models and forecasting tools will become crucial to the survival of hospitals and health systems. Why?
- One of the things I hear the most from hospitals and providers is how difficult it is to predict cash flow – especially when revenue comes from a multitude of sources. There’s always a lag in that information, which makes it challenging for revenue cycle leaders to understand the effect COVID-19 has had on revenue and take the right actions to strengthen their organization’s financial health.
There’s no doubt that COVID-19 affected inpatient and outpatient volumes, and some hospitals continue to struggle to reach pre-pandemic volumes. As a result, hospitals have been operating on extremely tight margins. That recent Kaufman Hall report predicts hospital operating margins will fall 80%, with revenues down as much as $122 billion compared with pre-pandemic performance by the end of 2021.
Projecting cash flow has always been a challenge, but, now more than ever, being able to accurately predict when revenue will come in – via analytics or machine learning technologies, for example – is critical. As an industry, we must prioritize strong prediction models and forecasting tools to help hospitals navigate through pandemic recovery. The ability to facilitate faster, more accurate adjudication will continue to be a huge focus in the years to come.
- Getting revenue to bounce back, you say hospitals will see an increased demand for patient education. Please elaborate.
- There is a massive education deficit in the area of payments. Patients need detail regarding the types of services performed, the charge per service, the amount paid by their insurance company and the out-of-pocket cost they are expected to pay for care.
Too often, these statements don’t provide a clear idea of whether the insurance company has paid its portion or how the patient’s out-of-pocket amount has been determined. When patients cannot ascertain this information, they are likely to hold off on paying their bill until they know what the “real” amount will be. This is a scenario that not only strangles cash flow for healthcare organizations, but also causes unnecessary confusion for consumers.
While new price transparency rules are a start, true transparency comes down to answering the question that is top of mind for patients, “How much will I pay out of pocket?” before care is delivered.
That’s an area where some organizations need to devote more time and resources to ensure patients can access this information on their own or with the help of customer support. Hospitals must ramp up pre-service communications around when patients can expect to be billed – and by whom – and the steps they can take to control their out-of-pocket expenses before care is delivered.
Finally, strengthening healthcare financial literacy is emerging as a priority area for healthcare revenue cycle. Patients often don’t fully understand their coverage benefits. In fact, recent research suggests that fewer than half of patients were able to understand their most recent medical bill – and it’s a primary reason why they pay their healthcare bills late
It’s an example of the impact revenue cycle departments can make on their organization’s financial health when they work to close gaps in healthcare financial literacy prior to the point of care. Proactively educating patients about their financial responsibilities for care and their options for payment will help hospitals survive the difficult fiscal years ahead.
- As the nature of the pandemic continues to evolve, you’ve articulated that healthcare revenue cycle departments must fine-tune their work-from-home approach. Why and how should they do this?
- I took over as the CEO of the SSI Group in December 2019, and a few short months later I sent our entire workforce home because of the COVID-19 pandemic. A lot of our employees had never worked remotely before, so finding ways to communicate remotely with staff members was vital to keep things running smoothly.
For more than a year, many revenue cycle billers and coders have been working entirely remotely with the help of digital solutions that enable workers to perform their jobs virtually. I think many of us thought that this would be a temporary solution, but remote work is here to stay, even if as a hybrid approach.
Just as businesses and organizations around the country were starting to bring their workforce back to the office, the Delta variant of COVID-19 has caused many to change their plans. It’s estimated that 75% of health systems and large hospitals will restructure revenue cycle operations because of COVID-19, with many adding more work-from-home positions.
Forward-thinking organizations need to start exploring ways to leverage revenue cycle management technology that allows more employees to work from home, while supporting productivity and compliance.
By taking advantage of advancements in software and technology to automate revenue cycle functions and processes, healthcare organizations can create working environments that keep employees safe and create higher levels of employee satisfaction while strengthening productivity and, ultimately, revenue.
For More Information: it strategies rebuilding pandemic ravaged revenue cycle