Blog Post

Revenue Cycle – A Path to Integration

Revenue-Cycle- A-Path-to-Integration

Managing a revenue cycle has never been the most glamorous component of running a healthcare organization. Preregistering patients, collecting co-payments, submitting claims, and ultimately obtaining reimbursement for services is a costly and cumbersome process. It’s also an essential one, since this is how healthcare providers are paid for the work they do.

Revenue cycle management takes on added layers of difficulty – and importance – in a healthcare landscape characterized by increasing alignment between hospitals and physicians. As the industry responds to shrinking reimbursement and the pressure to operate in a value-based care environment, more and more physician groups are turning to hospital employment or affiliation as a means of ensuring financial stability. As a result, leaders are waking up to discover that their hospitals have become health systems seemingly overnight.

What does this mean for a health system’s revenue cycle? In short, more complexity and the potential for less efficiency. Hospital-physician alignment tends to result in siloed financial operations, which can mean duplicative functions, inconsistent processes, and competing priorities.

In an effort to streamline revenue cycle activities across systems, some healthcare leaders are turning to a solution that offers greater efficiency but has traditionally been encumbered by political challenges – adopting an integrated revenue cycle (IRC) model.

An IRC coordinates revenue processes under a common leadership team, providing opportunities for cost savings, strategic alignment, and increased patient satisfaction. It’s an approach that establishes a single point of accountability; directs disparate teams toward common, system-wide goals; and promotes consistency and transparency throughout the revenue cycle.

While most healthcare executives see the benefit of an integrated approach, few have the stomach to try it.

Health system leaders often encounter internal roadblocks to integration, particularly from physicians concerned that a model combining hospital and physician finances will prioritize hospital billing. Physician dynamics, concerns about layoffs, IT limitations, and competing organizational priorities also converge to slow the momentum of IRC initiatives.

Leadership should be mindful of such considerations. IRC models can offer substantial benefits, but underestimating the effort and complexity involved in rolling them out is a mistake. Organizations that don’t engage in focused planning risk alienating physicians and other stakeholders, disrupting revenue cycle performance, and even increasing the cost of doing business.

That said, the degree and pace of integration can vary. Few health systems are prepared to attempt a full integration of their finances, and many will opt instead for a model that allows for a more gradual path to uniting their hospital and physician enterprises. But in a value-based healthcare environment, increased integration is inevitable. For health system leaders striving for efficiency, waiting to act means ignoring opportunities to improve.

For more information about adopting an IRC model, see “Integrating the Revenue Cycle for Improved Health System Performance,” an article that ECG Senior Manager Ben Colton and Senior Consultant Andrew Davis wrote for hfm.