At the Margins

The path to revenue cycle systemness starts with a vision. Here's how to build one.

by Anita Mago and Robin Brand

While hospitals are starting to get a better handle on cost growth, margins still remain slim and much too close for comfort. In 2018, the median operating margin for nonprofit hospitals was just 1.7%. But minimizing cost is only one piece of the puzzle—skillful management of revenue cycle operations is just as critical. As we speak with our members across the country, we consistently get questions such as:

  • How can I drive revenue cycle efficiency across the health system?
  • How do I lead and sustain revenue cycle improvements at my organization?
  • How can I lower cost-to-collect while delivering on goals for patient collections and denials prevention?

In response to these questions, RCAC presented the results of eight months of research, "The Path to Revenue Cycle Systemness," at our Revenue Cycle Executive Research Summit on June 3rd and 4th, at our offices in Washington, D.C. Below, we outline some of our key findings, including why—and how—revenue cycle leaders must invest in systemness. For a deeper diver into this and all of our latest research, register for our upcoming Executive Research Summits in Chicago and Marina del Rey. There are still a few remaining seats!

Register Now

Why systemness? Why now?

Many approached acquisition and consolidation as a means for solidifying market power. As a result, the search for operational efficiency has taken a backseat to other health system priorities, especially in the revenue cycle. Along with growing patient obligations and increasing payer denials, revenue capture becomes more complicated by the day.

So what should revenue cycle leaders do? Harness the power of systemness to increase revenue cycle efficiency.

Let's start by defining some terms. "System" can mean any health care organization that provides services at more than one facility, including acute, outpatient, and/or ancillary sites. And "systemness" means the capability to make decisions that are optimal for the organization as a whole, rather than for individual service lines, facilities, or stakeholder groups.

But as with any major change initiative, achieving systemness is a journey. All successful journeys require a map, a plan, and a willing crew. Without these things, the destination remains just a distant dream. Here, we outline four critical steps to the first phase of this journey: creating a unified vision.

How to build a unified vision

First and foremost, revenue cycle leaders must unite stakeholders around one vision and direction. Lacking this, initiatives will almost certainly meet staff resistance and may never secure resources necessary for implementation. Moreover, even if the proposal does get off the ground, unrealistic expectations will undermine successes. 

1. Secure commitment from key stakeholders

Getting the commitment of key stakeholders is perhaps the most difficult—and most critical—step on the path to systemness. While there is no magic formula, there are several strategies that have met with great success. First, always tailor the message to the audience. Different stakeholders have different concerns, and these must be addressed in their own unique way.

2. Clearly chart the course to systemness

To chart this path, leaders must first study the status quo. It's imperative to perform root-cause analysis and identify the operational realities and areas for improvement before jumping in to fix things. For instance, one revenue cycle leader we spoke to actually sat in physician clinic lobbies to observe patient access workflows before she began centralizing the function across all sites of care—an approach that enabled her to spot workflow problems and propose potential solutions.

Is this going too far? We think it's just far enough.

3. Leverage early wins to bolster support

As should be clear by now, this isn't a sprint—it's a marathon. And because it's a long-haul effort, leaders must remember that tomorrow's engagement isn't guaranteed. And that means early wins are crucial to maintaining organizational commitment. They not only validate a proposal's vision and strategy, but they also give emotional lift to initial supporters while attracting new supporters through demonstrated success.

In fact, early wins are so critical that you can't just hope for them—you must plan for them. One way to do this is to prioritize quick wins. The graphic below provides high-level guidance on areas for integration and respective difficulty, based on what we’ve seen at other organizations.

4. Create capacity for transformation

As with any change management initiative, it's important to think about who is actually going to do the work, and create the capacity for transformation. Without the "who," the "what" will never get done. 

Our research found that, at any given time, a manager has between five and 15 change initiatives on his or her plate. Not all organizations have the resources to add staff or hire consultants, but leaders should make sure that operational staff—if they're going to be involved in a new proposal—have sufficient space in their workloads. While there are pros and cons to every option, relying on only operational staff often leads to burnout, and it's best to distribute the workload when possible.

 

Subscribe to At the Margins

To get more of our top insights, make sure you're subscribed to the "At the Margins" blog.

Subscribe to At the Margins

Next, learn more with our expert perspectives on 'systemness'

Many health systems are only scratching the surface of the potential their scale offers. But today’s market leaders are leveraging purposeful integration and cohesive effort—what we call "systemness"—to streamline operations, deliver more reliable and coordinated care, rationalize fixed costs, and even transform entire delivery models.

Download our report for expert perspectives on how your organization can achieve "systemness."

Download Now