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A change in RCM technology can improve financial performance with these careful considerations.
There are any number of reasons a physician practice may decide that it’s time to make a change in their revenue cycle management (RCM) technology, from compliance and interoperability issues to smoothing out billing problems within an old system.
A change of this kind can often benefit a practice, but it must be undertaken with careful consideration and care, says Lane Jackson, CPA, a partner with Grant Thornton, who has advised healthcare providers in revenue cycle management for twenty-five years.
“The more efficient and better you can run [RCM technology], the better margin you can have,” Jackson says. However, he warns that such an undertaking should not be an “IT driven initiative” but “driven by clinicians and the personnel that have responsibility for financial performance, because they’re the real users of the system.”
Assess the costs
When providers are deciding to make an RCM technology change, Jackson recommends looking at two categories of costs. The first should be easier to estimate, he says, things such as software fees, implementation fees from the vendor, training costs for personnel, hardware costs and ongoing maintenance costs.
The other sorts of costs “may not be readily apparent,” he says, such as internal personnel you have to dedicate to build and design the system. It may also include loss of productivity as personnel receive training, as well as additional costs for end-users such as phones or tablets.
Additionally, he warns, “in just the simple financial impact on disrupting the revenue cycle, there is almost always a temporary decline in cash collections.”
There may also be a margin of error in learning the new system, which could lead to coding or other billing errors. So a practice has to be very thoughtful in preparing for this transition.
Since changing technology is always unnerving, providers may try to choose a new system that is similar to the old one, but Jackson cautions against falling into the trap of trying to maintain the same functionality. “Build the new system to match what you want your revenue cycle to look like in the future, not the status quo,” he says.
Once a practice has decided on new software and committed to the change, he recommends refining and optimizing an existing revenue cycle before the conversion. “In other words, do as much as you can to implement best practices before you convert or change platforms,” he says.
Communicate and support RCM staff
Finally, it is crucial to clearly communicate with key personnel the objectives of the change as early as possible, and to get input from the personnel that do the day-to-do revenue cycle and other activities. “They know the problems, issues, efficiencies involved in the process,” Jackson says.
He recommends, when possible, expanding staff just for the transition, as a practice still has to operate business as usual at the same time as a change is taking place.
Most importantly, a move to change RCM technology should be part of a larger vision of change, which can be clearly stated and communicated to all staff.
“What do you want the system to do? What is the vision for the revenue cycle? Those are the two key things that have to be considered to make it successful and maintain or improve financial performance,” Jackson says.