Hospitals Put Off RCM Upgrades Due To #ICD10, #MU Focus

If you look closely at the financial news coming out of the hospital business lately, you’ll hear the anguished screams of revenue cycle managers whose infrastructure just isn’t up to the task of coping with collections in today’s world. Though members of the RCM department — and outside pundits — have done their best to draw attention to this issue, signs suggest that getting better systems put in has been a surprisingly tough sell. This is true despite a fair amount of evidence from recent hospital financial disasters that focusing on an EMR at the expense of revenue cycle management can be quite destructive.

And a new study underscores the point. According to a recent Black Book survey of chief financial officers, revenue cycle upgrades at U.S. hospitals have taken a backseat to meeting the looming October 2015 ICD-10 deadline, as well as capturing Meaningful Use incentives. Meanwhile, progress on upgrades to revenue cycle management platforms has been agonizingly slow.

According to the Black Book survey, two thirds of hospitals contacted by researchers in 2012 said that they plan to replace their existing revenue cycle management platform with a comprehensive solution. But when contacted this year, two-thirds of those hospitals still hadn’t done the upgrade. (One is forced to wonder whether these hospitals were foolish enough to think the upgrade wasn’t important, or simply too overextended to stick with their plans.)

Sadly, despite the risks associated with ignoring the RCM upgrade issue, a lot of small hospitals seem determined to do so. Fifty-one percent of under 250 bed hospitals are planning to delay RCM system improvements until after the ICD-10 deadline passes in 2015, Black Book found.

The CFOs surveyed by Black Book feel they’re running out of time to make RCM upgrades. In fact, 83% of the CFOs from hospitals with less than 250 beds expect their RCM platforms to become obsolete within two years if not replaced or upgraded, as they’re rightfully convinced that most payers will move to value-based reimbursement. And 95% of those worried about obsolescence said that failing to upgrade or replace the platform might cost them their jobs, reports Healthcare Finance News.

Unfortunately for both the hospitals and the CFOs, firing the messenger won’t solve the problem. By the time laggard hospitals make their RCM upgrades, they’re going to have a hard time catching up with the industry.

If they wait that long, it seems unlikely that these hospitals will have time to choose, test and implement RCM platform upgrades, much less implement new systems, much before early 2017, and even that may be an aggressive prediction. They risk going into a downward spiral in which they can’t afford to buy the RCM platform they really need because, well, the current RCM platform stinks. Not only that, the ones that are still engaged in mega dollar EMR implementations may not be able to afford to support those either.

Admittedly, it’s not as though hospitals can blithely ignore ICD-10 or Meaningful Use. But letting the revenue cycle management infrastructure go for so long seems like a recipe for disaster.

About the author

Anne Zieger

Anne Zieger

Anne Zieger is a healthcare journalist who has written about the industry for 30 years. Her work has appeared in all of the leading healthcare industry publications, and she's served as editor in chief of several healthcare B2B sites.

1 Comment

  • I agree with the author’s conclusion as to the vulnerability of a hospital’s cash flow caused by the lack of investment in RCM systems. However we must ask ourselves how did this happen if we are to attempt a recovery.
    1) over the last decade, the power within a health organization has shifted from finance to clinical operations. The position of the president in many organizations is filled by a physician. The most significant change is the role of the CEO which is now also filled by a physician. As a result the focus of most medical centers became unbalanced in favor of clinical operations.
    2) as a result the organizations have invested in clinical systems that are strong in the clinical applications but weak in their revenue cycle component.

    A few options remain for the revenue cycle leadership
    A) add bolt-on solutions to their new clinical system ( if the vendor doesn’t prohibit them)
    B) make greater use of outsourcing
    C) join forces with other revenue cycle leaders and have the clinical vendor invest in their financial component to the same degree they invest in the clinical side.

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