Today, healthcare is almost as much about math as it is about medicine. With value-based medicine replacing the traditional fee-for-service system, reimbursement is increasingly tied to quality care and favorable outcomes. But what does that mean for revenue cycle management in outpatient facilities? Payment for service is changing, and keeping close track of what money you collect – and what money you don't – is vital to the continued success of your business.
As expenses rise and reimbursement trends change, it’s more important than ever to not only collect data on payments and processes, but also to analyze and understand it. Why? Because numbers are great to have, but they must be actionable to strengthen your revenue cycle.
Analytics: The First Steps
Analytics essentially takes disparate data points and uses mathematical techniques to discover patterns that describe and predict performance. Those patterns are your KPIs – the things that allow you to assess your operations and decide what you should focus on to improve results.
We've already discussed how important it is to accurately identify and track KPIs that are important to your revenue cycle. It’s also important to consider how often you look at your data. (Hint: once a year is not enough.) Making the commitment to tracking KPIs is essential, but arguably time-consuming. With the digitization of data, it's getting easier. And with an analytics software program, KPIs can be calculated for you. You decide what to measure, and the tool will do the analyzing.
But what's the benefit of all this analysis?
Here are three critical questions analytics can help you answer:
Am I leaving cash on the table?
Analyzing KPIs, especially those related to collections as a percent of net revenue, can help you monitor revenue cycle health in a direct way. If you have defined "net revenue" tightly, re-calculate it the same way every month, and find that your facility is not meeting expectations, you know you are definitively not collecting as much as you can, and revenue is still "out there." Your goal: find it and go after it. Truly analyzing your data not only helps you identify a problem, but also provides information on how to take action and start solving that problem.
Are all my services driving profitability?
In most situations, it's important that all the services you provide are individually profitable. Let's use an example to illustrate. An orthopedic center might traditionally perform knee and hip procedures, but then hire a physician to specialize in ankle procedures. To understand how this change affects overall center profitability, the ASC must look at all three procedures individually and compare them against each other. For example, what if the ankle professional prefers one vendor for a specific implant? Looking at the numbers, our center might find that this vendor’s price for that item makes the ankle procedure less profitable than the others. That's perhaps an easy enough problem to solve: find a less expensive vendor or negotiate new pricing. However, without a deeper dive into the data, that loss in profitability may have remained a mystery and impacted the financials of the whole center.
What should I be doing now to make things better in the future?
In business, as in life, we're the most successful when we're proactive. When we are reactive – i.e. ruled by emotion, circumstance, or lack of time to assess the "data" of a situation – we often fall short. Being proactive means making decisions based on analyzed data and forecasting the future. Being reactionary means fishing around, thinking, "This didn't work; let's change it," without true understanding of cause and effect. Analytics helps us better predict trends and make decisions confidently.
In healthcare, so much data is now available that it is sometimes difficult to know what to do with it. However, to grow your business, it’s important to leverage your data. That is key to successful revenue cycle management. By using analytics, this data can be less overwhelming by turning raw numbers into KPIs and helping you see the trends that allow you to not only assess your current performance, but also proactively identify and address potential problem areas before they arise.
How are you using analytics to strengthen your revenue cycle management?