Despite EMR, Revenue Cycle Management Costs Were Still Substantial

While they may not say so out loud, most healthcare organizations bought EMRs largely because they believed they could use them to lower revenue cycle management expenses. If so, they may be somewhat disappointed. A new study has concluded that at least in one case, the presence of a certified EMR didn’t make much of a dent in these costs.

­To conduct the study, researchers conducted interviews with 27 health system administrators and 34 physicians at a large academic medical center. The interviews took place in 2016 and 2017. The research team used the feedback to create a process map charting the path of an insurance claim through the RCM process.

Using this data, the researchers calculated the cost of each major billing and insurance-related activity, as well as a total cost of processing a claim from end to end. The data included costs for five types of patient encounters, including primary care visits, discharge ED visits, general medicine inpatient stays, ambulatory surgical procedures and inpatient surgical procedures.

The team concluded that estimated processing times and total costs for billing and insurance-related activities were 13 minutes and $20.49 for a primary care visit, 32 minutes and $61.54 for a discharged ED visit, 73 minutes and $124.26 for a general inpatient stay, 75 minutes and $170.40 for an ambulatory surgical procedure and 100 minutes and $215.10 for an inpatient surgical procedure.

To put these numbers in perspective, the research team noted that billing costs represented an estimated 14.5% of professional revenue for primary care visits, 25.2% for emergency department visits, 8% for general medicine inpatient stays, 13.4% for ambulatory surgical procedures and 3.1% for inpatient surgical procedures.

There are more than a few unfortunate things to be seen in these numbers.

One is that primary care practices spent a very high percentage of revenue on RCM, which could be crushing given their typically low margins. Given that PCPs are already being squeezed by patients who can’t afford to meet their high deductibles, this is a recipe for financial disaster.

It’s also troubling to see that that the academic medical center in question was spending more than 25% of its ED revenue chasing insurance payments. I found myself wondering whether ED prices might drop to a reasonable level if it was easier for these departments to collect from insurers.

It’s scary to think that these numbers might’ve been higher before the academic medical center installed its EMR. As things stand, if the EMR is lowering RCM costs, it doesn’t seem to be having a major impact. But I’m just guessing here — what do you think?

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

  • Thanks for sharing the valuable post! Yes I agree, use of EHRs does not reduce administrative costs. Administrative costs in the US health care system are an important component of total health care spending, and a substantial proportion of these costs are attributable to billing and insurance-related activities.

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