The value of revenue cycle vendors is even greater now than before the coronavirus pandemic. As hospitals work to restore business processes and revenue streams, they need to reevaluate how to get the most out of those relationships. But doing so might be challenging as more than 90% of revenue cycle executives surveyed said they depend on vendor-generated reporting to evaluate performance. Not surprisingly, those reports are often skewed in the vendor’s favor. And that’s a problem.
A comprehensive study of more than two billion hospital accounts, which included 8.31 million unique guarantors spanning 91 facilities in 29 states, found more than 50% of early-out and self-pay vendors were not compliant with best practices, service level agreements, or government regulations. Of all accounts places with vendors at 31 – 60 days, 36.1% were never worked. At 121+ days, nearly 23% were never worked. Even with those accounts with balances under $250, which should be low-hanging fruit, nearly 19% were never worked.
The bottom line is that blindly trusting vendors is not a sustainable strategy, especially during post-pandemic recovery. Following are three opportunities hospitals can use to ensure they are getting optimal results from their revenue cycle partners.
SET STANDARD METHODOLOGIES FOR MEASURING PERFORMANCE ACROSS ALL VENDORS
Many hospitals use past performance as a way to set goals and key performance indicators for their vendors. But past performance may not indicate best performance. The more effective way to maximize performance is to establish KPIs based on industry benchmarks. Make sure the data used is applicable to your own organization, including market, payer mix, and socioeconomic factors.
It is also important to audit 100% of accounts. Sampling only a subset of your vendors’ processes will show you only a subset of performance issues. This is a problem because it takes just one poor-performing vendor to offset your outsourcing ROI as a whole. If you don’t audit each and every account, you are nearly guaranteeing that you will overlook an issue with non-compliance that could put your bottom line at risk. And since so much can change from week to week, it is recommended that audits be performed weekly. This frequency enables hospitals to identify problematic trends and ensure issues are caught quickly and resolutions put in place before too much damage is done.
When conducting an audit, it is important to review all the way down to the account level. You can’t get at the root cause of an issue without full insight into the most granular details. This level of insight can reveal issues such as accounts that are being moved to bad-debt collections too soon, accounts that have been sent to multiple vendors, or accounts that have incurred duplicate fees. These are things easily missed with sporadic reporting.
Automating the auditing process can be of significant value, especially for hospitals using multiple vendors. Auditing software works by continuously running through a hospital’s system, scrubbing activity files produced by the vendor. The software identifies and flags potential issues on accounts and segments them based on the rules violated. Using this data, hospitals can approach their vendors to discuss opportunities for improvement. It may actually be that the vendors themselves are surprised by the findings as well. In this way, hospitals not only improve their own processes, but help vendors to do the same. This can improve financial results for both the hospitals and the vendor, while strengthening the relationship.
ALIGN FOR LONG-TERM SUCCESS
The most effective vendors are those that seek to align with a hospital’s corporate culture and long-term financial strategy. They should understand that each patient interaction is a reflection of the hospital’s brand and that a poor financial experience could negatively impact long-term revenue. According to Healthfuse research, the best vendors share the following qualities:
- Understand their impact on patient satisfaction and the hospital’s brand reputation
- Take ownership of the patient financial experience
- Employ industry best practices
- Hold themselves accountable
- Welcome feedback and embrace process improvement
FOCUS ON COMMUNICATION
When it comes to vendor relationships, some hospitals use a “set it and forget it” approach. Doing so, however, can be a detriment to the revenue cycle. According to Healthfuse research, the most effective partnerships are those where all key stakeholders connect on a regular basis. Discussion topics should include KPIs, long-term goals, current or perceived issues, technology, performance inconsistencies, and process improvements. If systemic issues are identified, vendors should be open to remediation and course correction. Using industry best practices, hospitals should design a process improvement strategy aligned to fit their own needs with consideration of the vendor’s capabilities. If the vendor can no longer meet the hospital’s requirements, a separation plan may be needed. However, salvaging an existing relationship, when possible, is generally more desirable than sourcing a replacement. Open, ongoing communication is the key.
THE PATH FORWARD
Getting back to a pre-pandemic normal is likely a long way off with many obstacles along the way. Outsourcers can play an essential role in that recovery journey. To be successful, hospitals need to be able to ensure all vendors are measured against industry benchmarks, that they’re aligned with the hospital’s long-term strategic goals, and that communication is open, ongoing, and productive. It is only through these three elements that hospitals will be able to identify underperforming vendors, hold them accountable, and ensure optimal performance for the long run.