ICD-10 pushes revenue cycle management to top of priority list
While 2012 saw a surge of optimistic predictions from hospital executives about plans to revamp their RCM solutions, with roughly two-thirds of hospitals planning to replace their core system before ICD-10 hit the industry, few of those hospitals have followed through. More than half of those same hospitals have yet to conduct a formal revenue cycle needs assessment or vendor selection process as of August 2013, with 28% blaming competing priorities for their lack of progress.
“The brakes have been applied to slow the radical RCM change out trend in which 8 out of 10 hospitals predicted they would be replacing their RCMs between 2011 and 2013,” said Doug Brown, Managing Partner, Black Book Rankings. Instead of rebuilding RCM systems from the ground up, as many previously hoped to do, hospitals are looking for add-on solutions or cobbling together the offerings from multiple vendors to cut costs and get something working before next fall. “Thirty-six percent of all CFOs confirm they are reassessing the capabilities of their current legacy, core and bolt-on RCM applications, optimistically looking for options in solutions they already own.”
“In many instances, facilities have focused myopic RCM task forces on ICD-10 coding, physician practice EHR integration, decision support tools, and insurance verification/eligibility, hence distracting the leadership teams from executing a well-structured, end-to-end RCM strategy,” Brown continued. “Most hospital CFOs have no choice but to leverage next generation RCM solutions in order to keep their organizations solvent. The reimbursement challenges ahead to get paid may require several new RCM applications, and the frank reality is that a failing RCM could quickly close a marginally performing hospital for good.”
While 77% of CFOs are confident that they can make any RCM solution work in a pinch, financial risk is more than an academic concern as healthcare providers hurtle towards the implementation date. Contingency plans are starting to garner a lot more attention as the industry starts to realize that not everything will go off without a hitch, and revenue risk management is a major part of bracing for impact. Experts recommend having at least six months’ worth of cash on hand, which could be a significant challenge for smaller providers.
“Shifting payment models and regulations are forcing hospital leaders to redirect previously launched budgets, priorities, and strategic plans to assess if new RCM solutions can rescue them from imminent hospital layoffs, even bankruptcies,” Brown says. As ICD-10 gets closer and closer, hospitals will need to start making tough decisions about their RCM strategies to stay solvent during this difficult transition.