The performance of revenue cycle management can make or break a surgery center. Administrators who answer the hard questions: what, why, and how, drive revenue cycle success. Focusing on key metrics, understanding the factors that drive the metrics, and implementing change are integral parts in an overall plan to maintain and improve profitability.
Key Metrics – Focusing on the What
Three of the most important metrics impacting an ASC’s revenue health are:
• Point of service cash collections: Collecting patient balances at the point of service improves cash flow and immediately reduces potential A/R. It can be argued that this is not a true part of the revenue cycle. However, the Healthcare Financial Management Association (HFMA) defines revenue cycle as “All administrative and clinical functions that contribute to the capture, management, and collection of patient and payor revenue.” Revenue cycle is not simply transmitting claims to payors. The process begins long before there is a claim to be submitted and the key to upward trending net revenue lies in understanding the cycle before a patient ever enters the door. “If you start at the beginning with the end result in mind you put yourself in a position to succeed,” says Jho Outlaw, SourceMed’s VP of Revenue Cycle Services.
• Net revenue: Net revenue is the overall cash collected as a percent of expectant cash. When ASC owners and operators don’t know their net reimbursement at the case level, they don’t know if they are collecting all the revenue they have earned. “A common way to judge collections and ASC health is whether net revenue is more than last month or last year,” says Outlaw. “It is a measure used when there isn’t access to systematic auditing tools and meaningful analytics. Manually reviewing net revenue metrics doesn’t give you proper insight into the reasoning behind the changes. A solid understanding of net revenue will help you to determine if you are leaving money on the table.”
• Aging accounts receivable: Once A/R becomes 90 days or older, it is deemed as aging A/R. Large percentages of expected cash residing in this aging bucket is a clear indication that there are areas of opportunity. Workflow automation can have a major effect on aging A/R and lead to faster realization of revenue while reducing potential write-offs.
If managed properly, these metrics provide insight into answering the harder questions: Why are collections down? Are we getting paid everything we are owed? What adjustments need to be made to address current gaps? An administrator armed with these insights has the transparency necessary to enhance financial performance and hold staff and payors accountable. In other words, visibility can lead to the revenue health of a facility.
Insights – Understanding the Why
Unfortunately, transparency and visibility are not readily available to many ASCs. In fact, the only visibility for some administrators comes after they have sifted through piles of paper reports and manually created spreadsheets. “The data is there, but it’s not in a readily available format to answer the questions at hand. For example, why is my net revenue down this month?” points out Terry Rajendran, SVP of SourceMed Analytics. “Having consumable data at their fingertips gives administrators the ability to answer the hard questions. Not what is my claim submission speed or net revenue, but instead why is my claim submission speed 'X' or my net revenue 'Y.' When you start answering the why you begin to understand how to increase profitability in your center.”
Rajendran knows first-hand the pain behind mining data because she used to be an administrator at a busy surgery center. “Pulling reports was frustrating and time consuming,” says Rajendran. “There was little time for interpretation of the data before board meetings, let alone development of strategies to implement change. It’s stressful to have the board or your management company call you and ask for explanations about why volume is up, but the revenue isn’t reflective of it. That is why I helped develop an easy-to-use solution specifically for ASC administrators and collectors.” The solution, SourceMed Analytics, helps administrators answer the hard questions. It provides access to analytics daily. Allowing administrators to address problems earlier and truly empower them to make a difference in the profitability of their center.
With a solution such as SourceMed Analytics administrators can focus on why net revenue is at its current level. They have the time to look at each step inside the revenue cycle process so that they can educate the board and give them the facts to make decisions to move the bottom line. If net revenue has changed, explaining why it is up or down enables the center to be proactive. It can determine the answers to business questions such as what cases are most profitable and whether or not to hire a surgeon in a particular specialty.
Workflow – Implementing the How
Knowing what is driving your center’s performance with actionable metrics truly makes a difference in the success of your organization. In addition to allowing business decisions to be made with facts, reducing A/R is one of the easiest ways to implement change and make a huge impact on cash flow. A basic but critical function is to monitor collections follow-up. Do collectors have systemic tools to allow them to work more claims? “As an administrator it’s important to help your staff work smarter,” says Rajendran. “A workflow automation solution can make all the difference. It again goes back to usable data. Figuring out both the quantity and quality of claims follow-up can be the difference in realizing revenue or writing it off. Workflow automation gives everyone in the billing office the opportunity to bring success to the revenue cycle. Imagine if your collectors could walk in each morning and have a list of all of the claims that have yet to be paid and/or have been underpaid according to the agreed upon contract. If the heavy lifting has already been done for them, they can start collecting the revenue your physicians have earned. SourceMed Analytics streamlines the process further by giving collectors a single screen to view all the data pertaining to a case.”
Insuring the revenue health of an ASC has become more complex. Utilize the right tools to simplify the process and identify the gaps in results.
This article is sponsored by SourceMed.