GeBBS Healthcare Blog

A large Chicago-based health system recently posted an operating loss of about $186 million in 2015, nearly 15 times the amount reported in the previous year. In addition, the system will lay off 250 employees and leave 450 jobs unfilled. The health system has told its bondholders that it will write off $53 million of its accounts receivable for patient bills that went uncollected, according to a major Chicago newspaper. The CEO has attributed almost half of the system's financial losses to an inadequate collections system, which forced the hospital to write off some bills for being too old to collect.

This did not have to happen!

By Nitin Thakor, GeBBS President & CEO

So far small hospitals and small health systems are not faring as well as large hospitals and health systems during the ICD-10 transition. The press is full of reports about how well the transition is going for large hospitals, but that is not the case for smaller community hospitals.

By Nitin Thakor, GeBBS President & CEO

According to a recent survey reported in Healthcare Finance, 83 percent of hospitals now outsource some accounts receivable and collections, 58 percent of hospitals outsource some contract management, 55 percent of hospitals outsource some denials management and 68 percent of physician groups with more than 10 practitioners now outsource some combination of collections and claims management.

By Nitin Thakor, President & CEO

I read with interest this week an article In Modern Healthcare’s e-newsletter titled, “Uninsured rate dips below 10%.” The statistic comes from The Centers for Disease Control and Prevention.

In my opinion the most important sentence in the article follows: “The survey also found that 36% of people younger than 65 were enrolled in a high-deductible health plan in the beginning of 2015.”

The growing number of people – not only the young -- who are opting into these high deductible plans is forcing healthcare financial managers to re-evaluate their present revenue cycle management solutions, and look to the next generation of solutions for answers to their financial woes. Shifting payment models, new regulations and healthcare reform are forcing healthcare leaders to redirect previously launched budgets, priorities and strategic plans to assess if new solutions can rescue them from imminent financial catastrophes.

According to a recent survey conducted by a major healthcare consulting firm, a growing number of U.S. doctors are leaving private practice for hospital employment. Only one-in-three will remain independent by the end of 2016, according to the survey. The number of independent physicians has declined over the last several years, from 57 percent in 2000 to 49 percent in 2005.

What are reasons for this dramatic decline in independent physicians?

The reasons cited most frequently are reimbursement pressures and overhead costs. Governmental regulations and various reimbursement mandates are making it almost impossible for independent physicians to survive. Many doctors are opting out of public programs, such as Medicaid, health exchange plans and Medicare.

Ascension Health, the nation's largest Catholic and nonprofit health system and a subsidiary of Ascension, showed everyone it recognizes the value of professional outsourced revenue cycle management when it made an offer last week to buy Accretive Health, the beleaguered RCM firm. Ascension is Accretive’s largest customer, representing about half of the company’s gross revenue from contracting activities last year. The health system said it does not intend to renew its professional service agreement with Accretive when it expires on Aug. 6, 2017, but they are apparently very interested in maintaining the company’s RCM services, hence their offer to buy Accretive.

Ascension isn't the only health system interested in owning an RCM firm, a strategy which has benefited for-profit hospital chains in recent years. Catholic Health Initiatives recently raised its stake in Conifer Health Solutions, an RCM firm majority owned by Tenet Healthcare Corp., to 23.8% from 2%.

The fact that these two large health systems are interested in owning RCM companies exemplifies the enormous benefits of having a professional outsource revenue cycle partner on any size hospital’s financial team. 

Earlier this month we saw the announcement of the Aetna/Humana acquisition and now, within the same month, Barnabas Health and Robert Wood Johnson Health System in New Jersey are following suit. The guiding force between this newly announced merger is most likely the opportunity for these two organizations to expand their reach, manage population health and adapt to new payment models.

With other large mergers looming in the distance, in New Jersey and throughout the U.S., I pose the question, once more, “what does this merger mania mean for the healthcare industry and what will be the fallout?”

The Aetna/Humana acquisition brings together Humana’s growing Medicare Advantage business with Aetna’s diversified portfolio and commercial capabilities - creating a company that serves the most seniors in the Medicare Advantage program and the second-largest managed care company in the United States.

What is fueling this merger mania? It is rumored that other big mergers are in the works and could be announced soon.

One reason for this merger activity could be that profits in the health insurance industry are effectively capped due to the Affordable Care Act’s medical cost ratios, so national insurers think they need to get bigger or risk losing out. These large, diversified insurers are looking to expand their core health plan businesses and take new services to market.

Credit balances are unavoidable and time-consuming. However, by law, they must be resolved. This activity does not have to be difficult even for already over-worked billing staffs. Professional outsourcing services are available to help with this growing challenge.

These services can be customized to fit into your specific workflow and increase your staff’s productivity, allowing you to increase the volume of accounts resolved on a daily basis, without hiring extra FTEs.

There are professional outsource companies that specialize in enhancing the financial performance of your revenue cycle management and related processes. They act as your partner to work within your legacy billing systems to research accounts in credit status, determine the root causes of the credit, and take appropriate corrective actions to resolve your credit balances. They leverage their healthcare expertise, technology, and qualified personnel resources. There is no capital outlay required.

Incorrect adjustments, erroneous credits, and misuse of debit codes make the credit balance task challenging without precision. 

In contrast, professional outsource analysts are diligent and well-trained to ensure outstanding credit balances are accurately resolved in an expeditious manner. Their services are highly client-centric. They understand a professional and cooperative environment is the key to resolving credit balances, many of which become account corrections, as opposed to actual refunds.

In today’s healthcare environment, credit balances are commonplace. The healthcare industry has a high incidence of credit balances due to multiple parties paying claims. The way that various information technology (IT) systems operate also creates credit balances.

Each provider must determine its credit balance strategy -- implement an internal program, which usually requires adding staff; outsourcing this work; or ignoring it. This last option is not optimal or realistic, given penalties for failure to comply with regulations on both the state and federal levels can be significant.

The common result is that healthcare providers do not want to add staff, if it can be avoided, and credit balance resolution provides a substantive distraction from the staff’s primary billing and collection focus. Among the reasons for this, is the provider belief that it’s painful to pay staff members to “give money away.” And, once behind in their credit balance resolution work, it is very difficult to catch up.

This leaves as the best alternative for handling credit balance resolutions – outsourcing! Following are the six top benefits and results for outsourcing your credit balance work: