With the pressure to increase net income intensifying, hospitals are finding new urgency in the old saying, “every dollar counts.” No longer can health systems focus their efforts solely on optimizing their largest sources of revenue and cost. Attention has now shifted to much smaller dollar amounts. One area to consider for opportunities for revenue enhancement and cost reduction is during physician practice acquisitions.
Maximizing ROI after practice acquisition requires a multifaceted, interdisciplinary approach. Here are a six of the major factors that must be addressed:
Billing Systems. A fundamental difference is evident when comparing billing systems used by hospitals versus physician practices. For hospitals, the reimbursable unit of work is typically collective in nature. They deal in low volume, high dollar claims; physicians, by contrast, deal in high volume and low dollar amounts.
Furthermore, physicians carry the burden of most prophylactic and preventive care - a clinical area most hospitals don’t concentrate on.
A much more comprehensive approach is needed - which is why maintaining physician-focused revenue cycle management systems alongside hospital-class management applications is often the best answer.
Practice-focused revenue cycle management (RCM) technologies are able to check eligibility before patient visits; what’s more, the rejection/underpay analysis found in better physician RCM systems will expose procedural errors that may go unnoticed over long periods of time if a hospital system is used.
Billing/Collections Staffing. The main business goal following an acquisition of a physician group should be to create an environment where operations are streamlined and net revenue is maximized. In terms of billing staffs, three alternatives are available to meet this goal: maintain the physician group’s billing department as a discrete, separate operation; combine responsibilities and/or location with the hospital’s billing department but keep processes separate; or fully combine the function.
It’s important to note that specialty practices have their own billing idiosyncrasies and compliance issues - some extremely nuanced. Bringing hospital systems and billing staff up to speed in these specialties is both time-consuming and expensive. No matter which option is selected, the staff that handles physician billing needs the proper skills, management, policies and procedures and, most importantly, technology and tools, to effectively pursue ambulatory bills.
Patient Payments. Unemployment, as well as the changing insurance landscape, has transformed patient payment responsibilities. More than ever before, patients are forced to shoulder a higher portion of their routine healthcare costs.
Given the higher incidence of high-deductible plans, increased co-pays and co-insurance, it’s critical to estimate patient contribution at the time of registration. Pre-visit eligibility verification is an essential part of the process, as well as payment collection at the time of service.
Single Statement. A worthy goal for any IDN is to be able to provide patients not only with integrated care, but also integrated billing interactions. This means one statement covering all services.
Unified billing is more convenient for the patient, increases prompt payment and lowers the chances of billing and claims submission errors. It can also reduce paperwork and improve profitability by better tracking the dollars owed.
Payment Reform. As Pay for Performance programs, medical homes, ACOs and bundled payments become more common place, reporting requirements to governments and payers will expand dramatically.
IDNs will need to develop - either by themselves or in partnership with a third-party RCM vendor - the capability to report performance under these programs. Hospitals and their network partners will also need to efficiently calculate, collect and track owed revenue. Finally, they will need the capacity to compute and distribute shares of payments received from these major revenue sources.
Cross-Delivery Analytics. Once a practice is acquired, it needs to be measured in a way that provides insights into its operations in the context of the larger IDN. Working from claim and patient payment information, financial leaders have the ability to ascertain all manner of important information. Unlike ad hoc reporting solutions, specialized RCM technologies can provide this data without reinventing the wheel via customized technologies or workflows.
In summary, it’s very true that hospitals face challenges accommodating the needs of physician networks. Health systems invest a great deal of time, money and effort building their networks. Adequate and thorough evaluations of how to best integrate the business processes of group practices are not only the keys to successful network growth, but also to maximize revenues for the larger institution. With the financial health of hospitals increasingly the issue, such decisions deserve careful consideration.
Kevin Weinstein is vice president of marketing at revenue cycle management solutions firm ZirMed.