Revenue Risk Mitigation Strategies

Healthcare Whitepaper
Revenue Cycle Risk Mitigation
New Strategies for Revenue Cycle Success

Version 1.2
12-1-2010

Foreword written by:

Lyman Sornberger,
Executive Director
Patient Financial Services

Cleveland Clinic Health Systems

    By: Phil C. Solomon
iSolutions iQ
5620 Southwyck Blvd.
Toledo Ohio 43614
800-673-1987

© 2010. iSolutions iQ. All Rights Reserved. Reproduction and distribution without prior written permission from iSolutions iQ is prohibited.

Table of Contents

Foreword 3
What is Revenue Risk Mitigation? 6
Background 6
Gain Best Practice Results Utilizing Operational Business Intelligence 8
Maximize Physician Charges by Leveraging Electronic Collaboration 11
Never Miss Another Medical Necessity Screening 12
Achieve Zero Registration Errors and Defects 12
Leveraging New Tools to Dramatically Increase Self-Pay and POS Collections 15
Summary 19


Foreword
The healthcare revenue cycle is now feeling the effects of consumerism
as employers focus on containing healthcare costs. How will providers
feel this shift in healthcare revenue cycle management or RCM? In
essence this means that today’s growing financial pressures on
healthcare organizations will continue to increase as consumers bear an
increased financial responsibility for their healthcare costs. Revenue cycle
solutions that extend the capabilities of your hospital information systems
are the key to improving access management, responding to healthcare
consumerism, enhancing cash collection, and improving payer
performance.

Improving Access Management
The use of financial clearance solutions in your healthcare revenue cycle
enables you to determine not only insurance eligibility but also the ability
and propensity to pay healthcare services. Including medical necessity
checking during scheduling and registration can reduce denials and
increase revenues and decrease audits such as RAC and MIP. Enhanced
workflow processes and enhanced validity of eligibility and estimates is
the way of the future and clearly needed to respond to a very dynamic
health care industry, consumerism, and transparency.

Responding to Healthcare "Consumer Shoppers"

Patient shoppers or "consumerism" is now the standard and Financial
Counseling is critical to patient satisfaction and protecting the financial
stability for providers and their respective healthcare institutions. Access
to healthcare costs and patient’s out of pocket expenses are no longer a
"nice to offer option" but now is a customer expectation. Allowing patients
to access healthcare costs either via portals or kiosks, schedule
appointments and provide self-registration on line, receive online
statements and make electronic payments are the new industry "leading
practices".


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Enhancing Cash Collection

After services are performed; electronic solutions, denial management,
monitoring productivity, underpayment pursuit, and cost containment
RCM techniques are critical to the financial survival of healthcare
institutions large or small. The decline of reimbursement mandates that
providers optimize performance and decrease expenses.

Improving Payer Performance
Gone are the days of "contentious" relationships with payers and
collaboration between provider and insurances are critical for survival in
the future of healthcare revenue cycle management. Defining the metrics
to measure between both parties is essential and recognizing that
measuring the payer as you do internally; is the recipe for success? Until
both the provider and payer is open to sharing their challenges and
recognizing the expenses associated with those flawed processes; they
will continue to experience unnecessary expenses and decreased patient
and employer satisfaction. Once both parties are transparent, they move
to the next necessary evolution of success in this ever changing industry.
The growing financial pressures on healthcare, organizations are forced
to seek innovative strategies to improve RCM. Providers and Payers can
no longer survive in a vacuum and nor is there any single solution.
Hence, finding a business partner that will complement these demands
and changes is crucial to responding and surviving to the healthcare
market challenges.

I encourage you to read this whitepaper and take note of the potential
strategies, technologies and solutions which are currently available to you
and your organization. The author, Phil C. Solomon has done an
admirable job in outlining the categories of solutions which can positively
improve your revenue cycle performance with limited or minimal budget
repercussions. In order to compete in today’s health care environment,
one must have the information to adjust, reformulate and often completely
4



change operational directives if necessary. Currently, tools such as the
ones described in this paper are available providing plenty of data as
feedback for business performance. Leveraging basic data in itself is no
longer enough. Knowledge is the key to improving RCM performance.
The progenitor for traditional monthly operational statements and
periodical reporting has given way to real time operational business
intelligence, consumer analytics and multifarious cascading data mining.
Knowledge is power and my recommendation is to use it to its fullest
capability.

Respectfully,

Lyman Sornberger
Executive Director Patient Financial Services
Cleveland Clinic Health Systems

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What is Revenue Risk Mitigation?
Background

You may be asking yourself what is the meaning of “Revenue Risk
Mitigation?” Revenue Risk Mitigation is the art of securing every dollar of
revenue available through revenue cycle processes from the services
provided to patients. Additionally, as a part of this mitigation strategy, it is
critical to identify, categorize and quantify every dollar which is lost or not
collected during the revenue cycle process, such as which accounts end
The most recent
up in bad debt and which accounts should be classified as charity or
data indicates
community benefit.
that a typical
mid-sized
In today’s unyielding economic climate, the majority of hospitals and hospital could
health systems are acutely interested in improving performance while experience
embracing innovation to improve the functionality of their revenue cycle. approximate
Where is the best place to start? It is much more cost effective and easier revenue leakage
ranging from
to improve cash collections and liquidity on current patient revenue base
$4.5 million to
than attempt to open new markets or drive new patients to your door. over $9 million
Once you have supplied service for a patient, every dollar should be each year
collected to offset rising operating costs. This whitepaper highlights five
key strategies designed to solve critical revenue cycle issues facing
today’s healthcare financial executives.

Current trends indicate hospitals are losing 3 percent to 5 percent of their
net revenue from inadequate revenue cycle management processes and
procedures. Capturing revenue from all payer sources has become of
paramount importance for hospitals to thrive in our difficult economy and
in some cases, stay in business. The most recent data indicates that a
typical mid-sized hospital could experience approximate revenue leakage
ranging from $4.5 million to over $9 million each year. (Stuller, 2010) The
largest amounts of revenue losses are a direct result of poor data capture
at the front end of the revenue cycle and operational inefficiencies
throughout. A smaller but still significant amount of losses come from
unidentified or undetected government and commercial revenue sources
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that end up in the self-pay financial class and eventually go uncollected.
Additionally, even though some of these unidentified insurance accounts
may ultimately be collected at a later date, the result of financial class
misallocation of insurance coverage results in an unnecessary increase of
AR days.

Bad debt continues to rise as patients take greater risk by choosing
higher deductable plans to reduce their overall out-of-pocket costs. Even No longer are
with the advent of healthcare reform, many patients are forced to under
the current “bolt
on” single
insure themselves or go without insurance all together. The challenges of
technology
collecting self-pay accounts continue to rise, as patients have become solutions
more astute consumers. In some cases, patients choose hospitals that acceptable as a
have the spottiest collection track record and continue a repetitive cycle of stop gap
receiving services without paying for them. Aside from the collection solution in
today’s complex
challenges of self pay, hospitals are plagued by the rising cost and
environment
financial repercussions of performing revenue cycle activities such as
handling insurance payment rejections and denials, identifying lost
charges, delayed payments, underpayments, and the hidden cost of
rework.

Leading healthcare operational strategists are continually searching for
tools and technologies, which offer end-to-end solutions to boost revenue
and capture operational cost efficiencies across the entire revenue cycle.
No longer are the current “bolt on” single technology solutions acceptable
as a stopgap solution in today’s complex environment. Healthcare
executives are looking for cost efficient, overarching strategies and
technology solutions, which complement their current systems and
processes, and provide the business and operational intelligence data
needed to optimize financial and operational performance.

Why are some hospitals experiencing revenue leakage? Why is it that
some categories of revenue losses are quantifiable, but there is no
immediate fix in site? In general terms, providers are challenged to stay
up with, and consistently meet, complex and rapidly changing payer

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requirements for pre-authorizations, medical necessity, and timely filing
limits. This is compounded by the rise in self-pay patients and the
inefficient data flow that supports the collection of these accounts. In
order to operate efficiently and effectively, easy to use systems with good
controls and fluid communication across the enterprise are needed.

Many hospitals have made great progress developing new processes and
procedures to improve and positively impact revenue cycle performance. The leading
The challenge for these facilities is sustaining the financial benefits over practice trend is
operating the
the long haul. This is more difficult than meets the eye. It takes qualified
revenue cycle
and trained personnel to execute many of the complex and difficult based on
manual processes which have been developed over time. Maintaining a advanced
top trained workforce and managing performance over time is no easy technology,
task. It takes strong leadership and minimal turnover to sustain the which delivers
Operational
performance gains of procedural and process oriented strategies.
Business
Intelligence.
Gain Best Practice Results Utilizing Operational Business
Intelligence Having access
Providers are beginning to leverage new ideas and specific solutions to
to information is
only a part of
for improving and maintaining peak revenue cycle performance. In short,
the solution; the
the leading practice trend is operating the revenue cycle based on key is affecting
advanced technology, which delivers Operational Business Intelligence. positive change
Having access to information is only a part of the solution; the key is with the
affecting positive change with the information.
information

The best operational managers know where they are in terms of
performance at any given moment. Having access to that level of
information in a manual environment is virtually impossible. Having
access to information and creating the ability to make decisions in real-
time is required in today’s fast paced business and healthcare climate.
New solutions are now making it possible and affordable to keep your
finger on the pulse of revenue cycle metrics and KPI’s by identifying
negative trends before they turn into performance issues. Relying on
retrospective reports is like reading Sunday’s newspaper on Monday. You

8



already know what has happened and it is too late to change anything.
The best performing organizations know that the value of reporting is only
as good as the user's ability to act on the information. Unfortunately, due
to constraints and inflexibility of most healthcare information systems,
healthcare organizations are forced to operate in a retrospective mode
rather than acting in real time before an issue becomes fully developed
Keep your finger
and can impact performance. on the pulse of
revenue cycle
With capital markets tightening and budgets continuing to constrict, metrics and KPI’s
healthcare financial executives are searching for non-capital intensive by identifying
solutions, which help them manage their business through sustainable negative trends
before they turn
technologies that are flexible and adaptable.
into performance
issues.
Current healthcare information systems do not offer the operational or
business intelligence capabilities needed to manage quality and workflow Relying on
across the enterprise. Many outside vendors have attempted to solve this retrospective
reports is like
ongoing dilemma by providing stopgap solutions which address pieces of
reading Sunday’s
the puzzle; however there are minimal options for a true “end-to-end” newspaper on
solution which is flexible and extendable enough to provide necessary Monday. You
support – until now. already know
what has
IT and financial executives should look for an Operational Business happened and it
is too late to
Intelligence solution, which minimizes the need to add more staff to
change anything.
support, such as an ASP model, and a flexible role based system, which
includes the easy addition, and modification of business rules which flag,
track and manage accounts through a work list. This proactive approach
to work flow management prioritizes key workflow elements beginning
with physician orders, scheduling, pre-registration to account write off.

Once Operational Business Intelligence tools are in place, revenue cycle
leaders need to benchmark performance metrics continuously. Such
performance based best practice comparables can be found at various
resources, such as the Hospital Accounts Receivable Analysis Reports
(HARA) produced by Aspen Publishers. (Petaschnick, 2007) When
benchmarking performance against national or regional data, goals must
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be set by considering all factors, including adjustments for unique
circumstances such as varied demographics, large employer layoffs or
plant closings. Stakeholders should set goals as “better than their best”
but believable and aim for performance in the top 10% of all operational
categories tracked.

Once performance benchmarks have been established and approved by Stakeholders
executive management, revenue-cycle leaders should communicate and should set
publish their performance on a daily, weekly or monthly basis, regardless goals as “better
of the results. When utilizing Operational Business Intelligence properly,
than their best”
but believable
there should be no surprises regarding operational metrics. With the best
and aim for
of breed Operational Business Intelligence systems, performance performance in
trending data is available in real time, therefore line staff, supervisors, the top 10% of
managers, directors and executive leadership should have their finger on all operational
the pulse of the revenue cycle at any given moment. Once in place, categories
tracked
performance metric tracking should be used as an integral part of a
continuous-improvement process.

Once empowered by real time Operational Business Intelligence tools,
goals for the entire enterprise need to be communicated to everyone
involved in the revenue-cycle process. All team members should be able
to articulate their role and respective contributions to the organization.
They should know exactly what their production and quality goals are and
understand the specific priorities needed to meet their goals. Operational
Business Intelligence tools offer simple-to-use performance dashboards
so everyone on the team knows exactly where they are in terms of their
performance and meeting their goals.

In order to maximize Operational Business Intelligence systems and
tools, revenue cycle leaders should look for integrated systems where
multiple solutions or services are bundled with an Operational Business
Intelligence analytics platform. By choosing a multi-faceted platform,
stakeholders can reduce the number of vendors they must manage and
therefore reduce the cost associated in managing them.

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Utilizing accurate, timely, and credible Operational Business Intelligence
data, health care financial and operational executives are able to
accurately benchmark key performance indicators in order to meet
organizational goals. These robust technologies allow even the largest
and complex enterprise to be nimble and act quickly to make the changes
necessary for optimal financial outcomes. Leveraging a suitable
Operational Business Intelligence technology offers the foundation and
road map for sustainable revenue cycle performance.
Revenue cycle
leaders should
Maximize Physician Charges by Leveraging Electronic Collaboration look for (CPOE)
In most organizations, physician offices are directly responsible for technology,
which is tied to
submitting patient orders to the hospital for scheduling services. Since a
an Operational
physician’s primary responsibility is to focus on patient care, they may Business
have taken the time or spent the money to invest in the latest technology Intelligence
to communicate with the hospital. Fluid communication is key to ensuring system so there
services are rendered by the preferred service provider rather than a are
consistencies
competitor. A typical scenario is the physician makes a diagnosis of the
across the
patient’s medical condition, and then orders a procedure or set of enterprise for
procedures to be fulfilled at the hospital. The standard communication procedure
method is to complete a patient order by hand and fax that order to the descriptions,
hospital. At that point, the doctor and hospital are at risk of the patient reporting and
communication
seeking services elsewhere.

The best method to mitigate a loss of revenue to a competitor is to
proactively ensure the patient follows through with the doctor’s orders and
is registered at the hospital to receive services. The most efficient way to
ensure this is to implement an electronic orders computerized physician
order entry (CPOE) technology at the physician’s office and at the
hospital. Revenue cycle leaders should look for (CPOE) technology,
which is tied to an Operational Business Intelligence system so there are
consistencies across the enterprise for procedure descriptions, reporting
and communication. Hospitals looking to gain and maintain strong
revenue cycle performance should avoid basic and common mistakes,
such as not verifying insurance coverage in advance and placing sole
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responsibility for correct documentation on physicians. With a quality
(CPOE) system, task management and communications improves
between the physician office and the hospital resulting in better data
capture and increased revenues.

Never Miss Another Medical Necessity Screening

The state of healthcare indicates that a substantial percentage of
healthcare services provided nationally are performed on Medicare A high rate of
patients, many involving high acuity of care. Billions of dollars are lost outpatient
annually through lack of understanding or adherence to correct medical-
denials is due to
lack of
necessity screening processes.
consistency of
the medical
A high rate of outpatient denials is due to lack of consistency of the
necessity
medical necessity screening process. This is due to the lack of easy-to- screening
use tools and the uniformity in screening for medical necessity. process. This is
due to the lack
New technologies are now available which simplify the process for of easy-to-use
screening and automatically process advanced beneficiary notices tools and the
uniformity in
(ABNs) instantly at pre-registration and the point-of-service. Using new
screening for
technologies during scheduling or the pre-registration process allows a medical
provider to quickly identify scheduled services that may not be covered by necessity
Medicare. The provider can then work directly with the physician on the
diagnosis or scheduled service to ensure proper reimbursement.
Providers will experience immediate positive impact by significantly
lowering their claim denials.

Achieve Zero Registration Errors and Defects

Revenue cycle financial outcomes are tied directly to the patient intake
and process flow, which begins at pre-registration and follows through
scheduling, registration, treatment, discharge, and collection. The typical
revenue cycle strategy for health systems has been to focus the bulk of
their resources at the back end of the process, on billing and collections.
Most revenue cycle challenges originate at pre-registration, scheduling
and registration. This is the critical time when the hospital is collecting
12



and verifying patient information needed to ensure submission of a clean
claim and receive full payment for services.

How are these front-end, quality improvement initiatives currently being
carried out? It is still not uncommon to see manual registration-data
quality processes, which involve the use of resources such as a quality
assurance analyst, spreadsheet software, and copies of face sheets and
insurance cards. Using this manual process, one FTE can review
approximately 100 to 150 registrations per day at most. Hospitals that Most revenue
follow this method of quality assurance are truly fortunate if they are cycle
actually able to review 5 percent of their total registrations. (Fleischer, &
challenges
originate at pre-
Bertch, 2006) This is an ineffective and costly method of performing
registration,
quality assurance. By the time a financial executive identifies an area for scheduling and
improvement, another burning issue rises to the top of the priority list. registration.
From an outsider’s perspective, it is analogous to a dog chasing its tail.
This is the
critical time
Simple errors such as listing the incorrect format of a subscriber’s
when the
identification number, or listing a minor as the guarantor, inserting an hospital is
incorrect address and social security number or missing a physician’s collecting and
name in order entry can create catastrophic outcomes which can be the verifying patient
information
root cause of substantial revenue losses.
needed to
ensure
Most health systems resort to back-end cleanup processes or special ad
submission of a
hoc collection projects to generate additional revenue and follow up on clean claim and
lingering claims. While this strategy can be effective, these processes receive full
usually occur too late for identifying and correcting the majority of the payment for
most common billing errors: wrong, expired, or incomplete insurance services
information; no preauthorization; non-coverage of service; or failure to
send notification.

Eliminating rework has to be the most import goal for revenue cycle
executives to work towards. When rework is minimized, the labor cost
savings will be substantial. One of the more costly FTE’s in patient
accounting is a Biller, who spends, on average, over 20% of their time
following up on and reworking claims. There is a solution to increasing
13



productivity of your expensive and well-trained billers. (Hopkins, 2005) It
is Automated Registration Quality Technology. Automated Registration
Quality systems play an important role in implementing effective pre-
registration and registration processes which focus on obtaining all the
critical information required to deliver consistent, correct and complete
billing.

If operating in a manual QA mode, performing these tasks at the front end
often requires adding additional staff, which is never a popular option. As
Reducing errors
hospitals convert to the latest registration quality and cascading eligibility
and registration
verification technologies, they can afford to reallocate their best and
defects at the
brightest staff to the front end of the cycle and eliminate duplicate labor front end of the
costs. revenue cycle
can save
The next generation registration quality tools should provide instant hospitals
feedback so that registration data correction can occur before the bill millions of
dollars annually
drops. These tools need to have the ability to customize alerts to be
by eliminating
delivered to users which cover every error scenario giving management back-end FTE’s
and the entire revenue cycle team the ability to control throughput and or shifting
ensure registrations are performed accurately and quickly. In many resources to the
hospitals throughout the nation, at least 75% of the typical revenue cycle front end to
achieve even
staff is dedicated to working bill hold reports, appealing denials,
greater positive
processing credit balances or following on billed claims. (Stuller, 2010) In
results
fact, HARA reports that the typical back-office staff personnel handles
over 6,000 A/R accounts in their queue at any one time. The amount of
people power needed to fulfill these tasks is enormous. Current trends
indicate that the average number of FTE’s involved in receivables
management functions at an average sized hospital is 27. (Petaschnick,
2007) Reducing errors and registration defects at the front end of the
revenue cycle can save hospitals millions of dollars annually by
eliminating back-end FTE’s or shifting resources to the front end to
achieve even greater positive results.

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It is quite possible for an average size hospital that processes registration
to see a 30% reduction of errors, and achieve at least a 30% increase in
cash flow improvement, all while reducing operating costs by as much as
15%.

Patient access and patient accounting personnel need to be empowered
with tools that measure success of registration functions in real time,
enabling them to achieve superior results. With that in mind, it is
The first step to
important to note that there are solutions available today that can offer
collect at POS is
advanced registration quality assurance solutions which cost less than a actually not
fully loaded FTE on an annual basis. collecting; it’s
confirming the
By collaborating together, and implementing the appropriate tools, type of payment
sustainable quality is achievable. The end result is more satisfied source prior to
the service
employees, happier patients and a healthy bottom line.
being rendered.
Leveraging New Tools to Dramatically Increase Self-Pay and POS New
Collections
technology
Self-Pay patients are on the rise. In 2009, the national average for solutions now
exist to search
hospital’s self-pay total as percentage of gross revenue was 5.29%.
for additional
Outstanding A/R due from self-pay sources averages 16.65% and this payer sources
trend looks to continue through 2010 and beyond. (Cheng, 2003) by manipulating
the patient
So, collecting from self-pay patients at the POS and afterwards should be demographic
easy, right? Just ask for the money when the patient comes in for service data and finding
or send them a bill. Well unfortunately it’s not that easy. While top
more eligible
payers
revenue cycle performers understand they can dramatically improve self-
pay collections by requiring payment at the time of service, they are well
aware of a major limitation posed by the lack of appropriate data at point
of service (POS). In today’s environment, collecting at POS is high on the
financial executive’s priority list.

The first step to collect at POS is actually not collecting; it’s confirming the
type of payment source prior to the service being rendered. New
technology solutions now exist to search for additional payer sources by
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manipulating the patient demographic data and finding more eligible
payers. When checking eligibility for commercial and government major
payers, these technology tools can perform historical cascading searches
of registration data to identify possible missed opportunities to capture
commercial insurance data and government sources of reimbursement.
These additional payer search and insurance propensity technology tools
have proven to increase cash collection as much as 20% over traditional
processes.
Knowing what a
Within the past 12 months, in many areas of the country, the self-pay patient owes the
financial segment has doubled in volume. On average, many facilities hospital for past
services and
have 16% or more of their accounts receivable residing in the self-pay
using that
financial class (including uninsured patient balances, unpaid co-
knowledge to
insurance, deductibles, and co-payments). If a hospital can achieve a 5% collect more
to 10% increase in collections by adding a new strategy to their cash
processes, the result can make a significant impact to their financial dramatically
wellness. Since the average collection rate for pure self-pay balances
helps meet POS
collection goals
range between 2% to 3% and collecting balances after insurance tops out
at approximately 35%, any incremental increase in collections drops
directly to the bottom line. (Boehler, & Hansel, 2006)

To improve POS collections, leading hospitals are collecting both
estimated self-pay payments and estimated coinsurance amounts at the
time of service. New tools are now available which enable providers to
determine estimates for charges in real time prior to the patient’s visit,
during the pre-schedule phase and at the point of registration. These
technologies are able to calculate charges with amazing accuracy within
seconds of a request at any point during the registration phase. In
addition to collecting for current services, advanced data aggregator
technologies enable the collection of past due balances for previous
services rendered. Knowing what a patient owes the hospital for past
services and using that knowledge to collect more cash dramatically
helps meet POS collection goals. The best-in-class POS patient

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estimators provide quality information without creating an abundance of
refunds on the back-end.

A POS driven strategy offers numerous benefits in addition to cash
collections, including real-time early classification of charity and medically
indigent patients. Categorizing patients early in the registration process
allows staff to focus on helping the patient by either assisting them with a
government subsidy program or classifying them as non-collectible. This The best
practice
allows collection staff to devote their attention to collecting cash instead of
algorithm for
pursuing uncollectable accounts. accurately
estimating
A maturing trend in self-pay collections is the use of real-time analytic future payment
modeling and scoring. Segmenting patients based on their payment behavior and
patterns and historical payment record both within the hospital system verifying a
and with outside creditors will help amplify the patient accounts which
patient’s
financial profile
need the most collection effort and decipher which accounts need to be
is only achieved
accelerated to bad debt write off. Additionally, an often overlooked when the
analytic tool helps financial counselors determine how much a patient can analytic output
really afford to pay, thereby taking the guess work out of negotiating a is cross
settlement or payment plan. At the end of the day, having access to the validated using
a complex
right information is powerful. No longer are the days where a single
mixture of
FICO® or credit score are truly helpful in determining a patient’s ability to actual patient
pay. The best practice algorithm for accurately estimating future payment historical
behavior and verifying a patient’s financial profile is only achieved when collection data,
the analytic output is cross validated using a complex mixture of actual patient
demographics
patient historical collection data, patient demographics and credit data.
and credit data

With new analytic and POS tools in place, health systems need to decide
how to process self-pay accounts and where they will get their biggest
bang for the buck. Utilizing leading edge outsourcing companies who
offer a variety of services, including integrated analytic modeling, eligibility
assistance and early out self-pay outreach programs are many times the
best option to collect the high volume low dollar self-pay accounts and
support the financial assistance needs of your patients. By outsourcing

17



non-core or lower value tasks to a trusted business partner, it leaves the
larger balance insurance accounts, government and other billing and
follow-up work to the hospitals seasoned staff. This allows hospital
revenue cycle executives to utilize their best trained staff to handle the
most important and relevant tasks. With new analytic tools available, it is
not prudent to make wholesale decisions such as holding all self-pay
accounts in house for 45 to 60 days because of the belief that some will
pay in that timeframe. Analytics now provide the data necessary to drive a With the proper
segmented strategy, which will take the guesswork out of work flow self-pay
collection tools
design, placement timeframe decisions and overall strategies.
in place, it is not
unconceivable
Another option is to consider partnering with financial institutions so they
for a mid-size
can provide loans to patients as an additional resource to collecting cash hospital to
internally or outsourcing self-pay accounts. This strategy that offers reduce its
drawbacks as it is not available to all patients; patients must meet financial
minimum credit criteria in order to be granted a loan. Additionally, the loan assistance
processing
stipulations can be onerous for the hospital if they engage in a recourse
expense by over
arrangement with the bank. The hospital will be required to “true up” with 50%, reduce
the bank if a patient defaults and reimburse the funds that were advanced statement costs
to them. by 10%, reduce
mail returns by
The healthcare industry faces pre-service to cash challenges that no over 25% and
yield an
other industry faces. Managing the revenue cycle requires that a labyrinth
additional
of rules and regulations constantly need to be adhered to. This drives
$500,000 to
revenue cycle executives to actively search for breakthrough technologies $2,000,000 in
and industry specific tools to help overcome the rigors of operating in a net revenue
fast changing and challenging environment. With the proper self-pay annually.
collection tools in place, it is not unconceivable for a mid-size hospital to
reduce its financial assistance processing expense by over 50%, reduce
statement costs by 10%, reduce mail returns by over 25% and yield an
additional $500,000 to $2,000,000 in net revenue annually.

18



Summary

The key factors which differentiate the best revenue cycle leaders from
those who deliver mediocre results are the passion and forethought
envisioning how the revenue cycle can operate more successfully and
which tools are needed to accomplish peak performance. These leaders
find creative ways and are not deterred by budget constraints or the
status quo to perform at the highest level, continually striving to
benchmark their performance against the industry’s top performing peers.

The first steps that should be taken to analyze performance improvement
or revenue-cycle redesign are:

‐ Assess and map the current state of the revenue cycle
- Identify key challenges and the systemic causes of the challenges
- Brainstorm strategic and tactical solutions to the challenges
- Outline the all encompassing best practices technology, outsourcing
or process redesign required to eliminate the challenges

Once revenue cycle challenges are identified, the strategies outlined in
this whitepaper offer solutions to mitigate revenue risk by leveraging new
technologies and techniques in the areas of Business Operational
Intelligence, Physician Order Communication, Medical Necessity
Screening, Zero Error and Defect in Registration Quality and POS and
Self-Pay Collections.

The overarching benefits of implementing the latest strategies detailed
above are:

- Ability to track any performance metric to ensure top performance
- Maintaining a seamless flow of information within the revenue
cycle
- Increased information accuracy
- Decreased denials
- Decreased manual effort to bill and collect

19



- Better accuracy and communication between referring physician
offices and the hospital
- Improved patient satisfaction ratings

The costs of inadequate revenue-cycle process execution permeate far
beyond the financial ramifications. Poor performance creates a cloud
across the entire organization. Successful application of leading revenue
cycle strategies requires the involvement and acceptance of departments
outside of patient access and patient accounting. Revenue cycle quality
and performance require the buy-in from cross-functional groups to
support the new systems and technologies needed to sustain high
performing revenue-cycle output. It is paramount that the focus on
revenue cycle activities becomes an operational priority across the
industry. Every specialty, large or small facilities and for-profit and not-for-
profit organization need to make revenue cycle performance a top
priority.

Money isn't the only factor to consider in evaluating revenue cycle
performance. Patient satisfaction goes hand in hand with operational
performance. Even if you don’t have the data to support the assumption,
more often than not, if you have a revenue cycle performance problem,
you have a patient satisfaction problem.

Works Cited

Stuller, E. (2010, August 26). Top 10 revenue cycle mistakes. Retrieved from
http://findarticles.com/p/articles/mi_m3257/is_1_59/ai_n8700915/?tag=content;co
l1

Petaschnick, J. (2007). Hara. Report on 4th Quarter 2007, 22(1), Retrieved from
http://www.aspenpublishers.com/PDF/SS10788123.pdf

Fleischer, R, & Bertch, D. (2006, March). Trouble at the back end? look at the
front end. HFMA, Retrieved from http://www.ahisoftware.com/wp-
content/themes/AHI/media/hfma-article.pdf

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Hopkins , S. (2005, October 1). Benchmarking your business for now and later.
Retrieved from http://homecaremag.com/mag/medical_benchmarking_business

Boehler, A, & Hansel, J. (2006, January 1). Innovative strategies for self-pay
segmentation. Retrieved from http://www.allbusiness.com/banking-
finance/banking-lending-credit/10579823-1.html

Cheng, T. (2003). Taiwan’s new national health. Health Affairs, 22(3), Retrieved
from
http://www.populationmedicine.org/content/pdf%5CCheng%20TM%20Taiwan's%
20new%20national%20health%20insurance%20program.....%20Health%20Aff%
202003.pdf

About the Author

Phil C. Solomon is the Chief ROI Officer of iSolutions iQ, the healthcare
industry’s most innovative operational business intelligence firm proving
technology and services solutions to providers nationally. Phil oversees all
aspects of the firm’s activities and operations including the development of the
overall strategy, product development and vital mission and roadmap of the
organization. Phil and the company’s business and technical leaders are focused
on continuing iSolutions iQ’s innovation, leadership and deepening relationships
with their most important business partners. Phil’s 19 year track record of success has been
focused exclusively in technology solutions, services outsourcing, collections, customer care and
call center applications. Previously, he was the CEO of a Fast Tech 50, call center performance
improvement technology firm, and a principal executive at an INC Magazine American top 500
Fastest Growing Private Company. In addition, he managed the Healthcare vertical market for one
of the largest global outsourcing and receivable management companies in the world.

He is an active member of the HFMA, NAHAM, MGMA and AAHAM and is frequently featured as a
speaker at industry trade conferences and educational seminars. Phil resides in Atlanta, Georgia
and holds a B.A. degree from San Diego State University.

About iSolutions iQ

Founded in 2006, privately-held and headquartered in Toledo, Ohio;
iSolutions iQ is a leading healthcare revenue cycle performance
improvement and analytics company – leveraging business
operational intelligence and specialized analytics to improve operational and financial performance
for large and small health systems, hospitals and large physician clinic’s and groups. iSolutions iQ’s
mission is to evaluate, measure and decipher key performance indicators, then provide the tools
necessary to manage revenue cycle activities with peak performance.
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iSolutions iQ’s technology delivers analytical data in real-time, increasing the visibility of business
information for faster, informed decisions improving performance and increasing operating margins.
For information, visit www.isolutionsiq.com or call 800-673-1987.

Foreword written by:
Lyman G. Sornberger, Executive Director, Patient Financial Services, Cleveland Clinic Health
Systems

Lyman Sornberger joined Cleveland Clinic Health Systems in 2006 and is the Executive Director of
Patient Financial Services for the Cleveland Clinic Health System (CCHS). Prior to his affiliation
with CCHS he was with the University of Pittsburgh Medical Center [UPMC] for twenty two years as
a leader in the revenue cycle management.

His role at Cleveland Clinic Health Systems is comprised of the Revenue Cycle Management for all
10 Cleveland Clinic Health System Hospitals and Foundation Physicians. In addition, he is
responsible for the management of Weston, Florida Technical and Professional billing. Lyman is
responsible for all CCHS billing for the main and regions, patient access for the East and West nine
hospitals, and Medical Records, Coding, and transcription for their Main Campus. In total there are
1100 employees under his direction with a model that is both centrally and de-centrally dispersed.

In parallel in the past twelve years he is proud to have served as a consultant and advisor with
various practices nationally. He has authored numerous articles for HFMA, AHAM, and other
leaders in the Revenue Cycle arena. Mr. Sornberger earned his BS and Masters at the University of
Pittsburgh and served as a Medic in the US Army prior to joining the Health Care private sector.

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