REVENUE CYCLE BASICS: The Future of Revenue Cycle Clue..It s the Data Warehouse Derek Morkel, President & CEO, GAFFEY Healthcare
REVENUE CYCLE BASICS: The Future of Revenue Cycle Clue..It s the Data Warehouse Introduction: The Changing Landscape The business fundamentals of healthcare are changing rapidly before our eyes. Many new and different payment methodologies have been introduced over the last 5 years. While they currently represent only a small portion of total reimbursement, that is likely to change over the next 5 to 10 years. This in addition to the cost pressure brought on by the fiscal crises, Obamacare/ACA, reduced reimbursements etc. is causing many hospitals to look very closely at what resources are going to be necessary to adapt to these and other changes to come. The question thus becomes what does revenue cycle look like 5 or 10 years from now and what are the key elements we should be focusing on to prepare for the current changes and future challenges. Some of the broad changes/trends that are already taking place are: Changes in value proposition payments that are currently being made based on episodes of illness are moving to rewards for healthy behavior. Reimbursement by individual patient and individual encounter to group payments risk bearing contracts. Single provider payments to bundled payments across 2 or more providers ACO s. Payments and penalties tiered by outcome. This list is not exhaustive and many of these changes are in the very early phases of adoption but are certainly starting to take place and growing rapidly. They all affect the revenue stream and thus are Revenue Cycle related. What does the future look like? Michael Porter and Thomas Lee wrote an extremely pertinent article regarding the future of healthcare in the Harvard Business Review (October 2013) The Strategy That Will Fix Health Care. The thrust of the article was that healthcare providers should be very focused on making value their overarching goal. They put this goal into six functional buckets/targets: 1. Organize into Integrated Practice Units 2. Measure Outcomes and Cost for Every Patient 3. Move to Bundled Payments for Care Cycles 4. Integrate Care Delivery Across Separate Facilities 5. Expand Excellent Services Across Geography 6. Build an Enabling Technology Platform Page 1
Points 2,3 and 6 have profound implications for the payment of healthcare services and thus the future of Revenue Cycle. If we define Revenue Cycle as Getting Paid Correctly for Services Rendered then our industry has a great deal of work to be done to create the infrastructure, software and services necessary to get paid under any of these future scenarios and even some current ones. Current Technology Limitations The current structure of the vast majority of healthcare data and thus the various software applications that run off this data for business needs is extremely limited in its ability deal with current trends let alone future changes. The main issues that exist are well known and the subject of much discussion as it relates to this topic directly, big data and healthcare. The principal areas of structural inefficiency are: Facility/Provider specific applications the silo effect. Applications and data that are tied to and customized for a specific hospital/provider. This is the cloud vs. client server argument. Single use applications this is a similar issue to the one listed above applications that have a very narrow use and thus very narrow dataset and customized by facility. Non standardization of data between providers (even in the same system, applications and various business segments within hospitals. Data and applications are fragmented/dispersed databases, hosting locations, access points, and security. The end result of all these inefficiencies is that there is a massive amount of data that is created and stored by providers but it is underutilized, not connected and we are thus not creating the value from it that we should be. It also creates rigidity because all of our current applications and their respective data are not aggregated and standardized no flexibility to change direction or analyze trends or behavior across the entire spectrum. One thing we can all agree upon is that there will be unexpected changes in healthcare. The future of healthcare (not just Revenue Cycle) will be a more patient focused and connected one. This has to require a much more flexible approach not only to our approach but to the data that underpins the system. Data is the key to all of this. Revenue Cycle Model of the Future: The future of getting paid correctly (if you believe anything that you have read) will be based on a few core competencies: 1. Measuring and managing risk ACO s are currently an example of this. Hospitals will have to look like and manage more like insurance companies. Track value added by patient across multiple entities. Page 2
2. Measure and manage risk across multiple entities many systems today not only have Hospitals and Physicians, but are also involved in EMS, Hospice, ASC s, PCMH projects, Nursing Homes, DME, HMO etc. cost and risks occur in all of these entities and it has to be measured and tied together. 3. Cost Accounting will be a core Revenue Cycle competency if you do not know your costs across all your entities and by patient how will you manage risk or know that you saved (or didn t) money in cost sharing arrangements. ACO s are a good example without integrated cost accounting for all entities how do you audit your savings in the model? 4. Traditional Revenue Cycle operations let s not forget that we will have to bill and collect a significant amount of revenue for all our entities the old fashioned way. While the model is changing, the traditional insurance model will continue for a long, long time. Other than Point 4 there are very few entities today that can tick off boxes 1-3. The software and ultimately the data limitations discussed earlier are the key limiting factors. Our data is not connected, it is not standardized and it is not flexible - it is not in a Data Warehouse (DW). There is much talk about Cloud technology and its benefits that discussion is really about the value of Data Warehousing a central location with a standardized data approach spanning all entities. Current cloud based workflow and automation engines like GAFFEY AlphaCollector use the Enterprise DW model for data aggregation and analytics for these same reasons. It is flexible and provides analytic capability across multiple facilities, systems and scenarios. The Case for the Enterprise Data Warehouse: The Enterprise Data Warehouse or Data Mart is the key to the future of getting paid correctly or RCM (and many other segments of healthcare). Using the DW approach as the foundation of any strategy is the key. The DW pulls all the data from all relevant applications into a single location and thus provides not only the platform for current applications and analytics but also the flexibility for any future uses. One of the other main benefits of an enterprise DW is that it can be the single source of truth for all healthcare data related activities once the DW is reconciled, then it becomes the source of truth for the entire enterprise there is no need to spend time and money figuring difference from one piece of software to another. It all runs from the same data store. Data across entities can be standardized more easily and it can be tied together. Key analytics like aggregating accounts, clinical results, tracking costs across hospital and physician practices which is difficult today become not only simple, but a standard practice. Cost Accounting approaches can be created for any and all entities within the system and can be deployed as soon as services are rendered so that they are known in real time. It will become even more necessary in the future to know and manage cost, risk and outcomes in real time not once a month or once a quarter. We will need to be proactive and not reactive. Page 3
All of this requires data, data that is connected and data that is real time i.e. the enterprise DW that can be controlled by the provider. The systems and applications that we use to manage healthcare are certain to change over time but if we have a comprehensive enterprise data strategy then we will have the flexibility to adjust to changes in our model. At some point the entire healthcare system and its data in the United States will have to be connected think uber HIE how we connect to that will be the critical element that determines much of our success or failure. Conclusion Today we have necessary data stored in many different places EMR, Patient Accounting, Risk Management, Health Plan, Physician Practices, Cost Accounting, Billing, Nursing Home, EMS. We are already starting to need access to pieces of this to get paid today and that trend is accelerating rapidly. Having all of your data in an Enterprise Data Warehouse that you control and that provides the ability to manage and measure everything across all your business lines and by patient will be the key to effective management in the future. Revenue Cycle is a small part of that, but if we are going to be paid correctly under many different methodologies then we will need immediate access to the underlying data. The tools that we use to get paid are likely to change over time as are the payment methodologies the only constant will be that they will all consume data from every corner of your business. Tracking each and every patient (including cost) and the value proposition for those patients across the continuum of care is where we are headed. Providers will have to have a DW to pull this off. Page 4