Relying on an outdated legacy HIS impairs the ability of health systems and physician organizations to optimize both operational and revenue cycle efficiencies, as well as patient safety, clinical outcomes, and decision support improvements.. However, according to a report by Moody’s, conversions can negatively impact revenue cycle, “In a sample of hospitals that have recently invested in major EMR and revenue cycle system conversions, increased expenses and slower patient volumes contributed to a median 10.1 percent decline in absolute operating cash flow and 6.1 percent reduction in days of cash on hand in the install year.” Additional risk factors identified included increased write-offs and other financial disruptions.
The reason many health systems and physician organizations experience cash flow issues during a conversion is due to reduced productivity. This may be from dividing staff time between working in the legacy system and working in the new system. Another reason is the steep learning curve that comes with transitioning to a new system or a change in workflows. Reduction in cash flow during an HIS conversion can also come from competing priorities. Is it better to focus on shoring up unworked A/R in the legacy system or is it better to focus on getting information into the new system? Outsourcing A/R management means revenue cycle leaders don’t have to choose between the two. Partnering with revenue cycle experts means the internal team can focus on learning the new system while the outsourced partner manages receivables in the legacy system.
This brings up another way outsourcing A/R can add value: training the team on the new system. In most cases, an experienced outsource partner will have expertise in both the new system and the legacy system, which gives them the ability to emphasize differences and guide team members through the cross-walk. They can provide both a high-level overview as well as detailed step-by-step instructions. This not only gives a revenue cycle team a head-start on the new system, but also gives them more confidence and protects against staff turnover.
An outsourced partner can help by working down aged receivables so the health system and physician organizations have less aged A/R after go-live. One successful approach is to outsource accounts 90 to 120 days since these take the most effort and time to reconcile. Accounts over 120 days become less collectable as they continue to age so having the outsourced partner work these down sooner than later, prior to go-live can help reduce write-offs. Because the internal team will be able to focus on the newest A/R, they’ll be able to get ahead of accounts on the verge of becoming past due, reducing write-offs and the need to send to collections.
Leveraging revenue cycle experts during an HIS transition brings another opportunity that many health systems and physician organizations may over-look: resolving denials. Denied claims means denied revenue and no one can afford that, especially now. Having an outsourced partner work denial inventory allows the in-house team to focus on learning the new system. It also helps reduce interruptions to cash flow during the transition. There are even some outsourced partners who will perform an audit of denials going back 12 months. They can then use this assessment to identify opportunities for improvement that can be implemented in the new system. Doing so helps reduce denials and optimize reimbursement for the long run.
The bottom line
Transitioning to a new, better HIS presents an opportunity to improve efficiencies throughout the revenue cycle while improving quality outcomes and optimizing reimbursement. Similarly, outsourcing allows health systems and physician organizations to better stratify their resources to reduce redundancy and protect against interruptions to cash flow. It also allows for a fully reconciled legacy A/R wind down, which generates consistent cash flow throughout the transition to the new system.
The bottom line is that outsourcing A/R during an HIS conversion can help health systems and physician organizations achieve all the benefits of the new system faster and with less effort. It also shortens the time to receive a full return on investment.