Five Ways Hospitals Can Use Automation To Help Achieve Greater Agility In The Revenue Cycle

by | May 13, 2021

Healthy margins have eluded hospitals and health systems for some time now, with the median margin being just 3.5%.[1] The COVID-19 pandemic has made things even more challenging. According to a recent report by KaufmanHall, which the American Hospital Association commissioned, hospital revenue will “likely be down between $53B and $122B due to the lingering effects of COVID-19.”[2] The report goes on to predict that the number of hospitals operating with negative margins will increase in 2021 and that “the financial health of rural hospitals will be significantly affected.”

The impact of the pandemic appears to be ongoing even as the country begins to reopen; there is just no way of knowing how long recovery will take. One of the most effective ways to ride out the storm, reverse the damage, and speed recovery is by being agile. A great place to start is by automating processes that affect the revenue cycle. An article by Healthcare Finance indicates there is an overall movement by revenue cycle leaders toward automation in an effort to expedite claims processing, reduce payer denials, and expedite collections.[3] There has never been a time of greater need to automate than during and after a pandemic.

According to the American Medical Association, 25 – 30% of the country’s total healthcare expenditures are direct transaction costs and inefficiencies associated with the claims management revenue cycle.[4]

Automating the revenue cycle

Following are five opportunities every hospital can leverage to ensure much-needed revenue doesn’t slip through the cracks.

Make sure your claims are clean upon first submission. Issues like typos and incorrect coding increase rejection and denial rates and put a cog in the wheel of your reimbursement process. The best way to ensure claims are correct when they hit the payer’s adjudication system is to automate front-end submission by using a scrubbing software that proactively catches errors so they can be quickly fixed. It’s also important to keep staff educated on coding updates. Think there’s not enough time or resources for ongoing training? The time and effort spent upfront will pay off in time and resources saved by reducing rework and denied claim write-offs.

Put particular emphasis on filing deadlines. Payers are constantly changing their requirements. It can be easy to overlook things like updated filing windows, especially for staff who are already struggling with backlogs and a heavy daily workload. But missing filing deadlines is one of the top reasons claims are denied, and timely-filing denials are some of the most difficult to appeal. Because of this, staying on top of payer requirements for documentation, prior authorizations, and medical necessity should be a high priority in the workflow. Assigning one or two resources the task of proactively monitoring payer changes is a great way to prevent lost revenue.

Make the patient access process more effective. Whether at registration in a hospital or at the front desk of a doctor’s office, capturing patient information and coverage data is a process ripe for error—especially when the process is done manually. One of the top causes of denied claims is missing or inaccurate information, especially with coverage information. The best way to prevent these types of denials is to use software specifically designed to gather and verify this data, thereby automating the process and reducing errors.

Now that payers are using more sophisticated methods to identify potential denials, providers can’t afford to take a reactive approach. Using software to automate the patient access and claims management processes is the best way to reduce denials.

Automate denials rework. When denials do occur, many providers choose to rework only those with the highest value. But even small claims add up over time. During a time of such uncertainty, who can afford to let money—any amount—walk out the door unnecessarily? Instead, providers can use denial management software that provides easier access to denial codes and claim history, which reduces the need for timely research. These solutions also enable staff to work by exception, which further streamlines the process. Providers need to capture every dollar owed, especially now.

Streamline self-pay collections. Even before COVID, 40% of adults in the U.S. said they would have trouble paying an unexpected $400 expense.[5] Now consider that more than 14 million workers and their dependents lost employer-sponsored health insurance during the pandemic.[6] Even though businesses are beginning to reopen across the country, the financial impact on consumers is likely to impact their ability to pay their medical bills well beyond 2021.

Between May 2020 and the end of March 2021, individuals with past-due medical debt grew from 19.6 million to 21.4 million.[7]

The traditional process of sending three or four statements and then turning accounts over to collections is especially ineffective at this time. A better approach is to find ways that make it easier for patients to pay. Offering payment plans where future charges of the entire family can be rolled up into a single monthly payment is a great option. Other ways to make it easier for patients to pay is to provide multiple options for doing so. These include online portals, digital payments, and automated phone payments.

The bottom line

A report by McKinsey & Company states, “While few healthcare organi­zations are truly agile today, agility will be an increasingly critical capability moving forward, given the industry’s turbulence, complexity, and accelerating speed of change.”[8] In our next blog, we’ll talk about the role of outsourcing in helping hospitals achieve that agility. We’ll cover the importance of transparency, accountability, and technology in getting the most return from your outsourcing dollars.


[1] https://www.aha.org/system/files/media/file/2021/03/Kaufman-Hall-2021-Margins-Report-final.pdf

[2] ibid.

[3] https://www.healthcarefinancenews.com/news/30-hospitals-and-health-systems-using-revenue-cycle-automation-require-two-or-more-vendors

[4]https://www.beckershospitalreview.com/pdfs/April_30th_Saturday/1115_F_Dahmen_Denials%20Management%20Reducing%20and%20Eliminating%20Claim%20Denials%20Utilizing%20Best%20Practices.pdf

[5] https://www.federalreserve.gov/publications/files/2018-report-economic-well-being-us-households-201905.pdf

[6] https://www.commonwealthfund.org/publications/issue-briefs/2020/oct/how-many-lost-jobs-employer-coverage-pandemic

[7] https://www.nbcnews.com/politics/politics-news/medical-debt-engulfing-more-people-pandemic-takes-its-toll-n1265002

[8] https://healthcare.mckinsey.com/why-agility-imperative-healthcare-organizations/

Share this post