Clinically Driven Revenue Cycles Create More Efficiency, Measurable Results

By Scott Westcott, Contributing Writer

Nicklaus Children’s Hospital is wedding finances with patient care data to create more efficiency, increase profitability, and improve the delivery of patient care.

For years, Edward Martinez, SVP and CIO at Nicklaus Children’s Hospital, saw the glaring disconnect between patient care and the cost of that care. It was the common problem that has long vexed healthcare providers — what happened in the hospital room didn’t always align with the information and data that ultimately ended up in the billing department.

“In healthcare, we spent about 40 years with pretty much the same patient accounting system,” says Martinez. “People became comfortable in that environment and saw very little reason to change it.”

Yet today, there are numerous reasons to change. Healthcare providers cannot afford — both financially and from a regulatory and quality-of-care standpoint — to have a disconnect between clinical care and the revenue stream. Progressive providers are focused on efficiency, compliance with new regulations associated with the ACA, and keeping pace with increasing patient expectations regarding transparency of care and healthcare costs. To achieve these goals, Nicklaus is among the many providers developing and managing clinically driven revenue cycles aimed at seamlessly integrating clinical data with financial information.

Developing An Integrated Approach To RCM
Nicklaus, part of the Miami Children’s Health System, has been evolving toward a clinically driven revenue cycle for the past few years. The hospital recently took a significant step forward by implementing a new patient accounting solution that facilitates an integrated system that makes that key connection between care and costs.

That solution, Cerner Patient Accounting, provides the foundation for financial management and enables Nicklaus to integrate clinical data with the appropriate financial information to manage patient accounting across the continuum of care. It pulls supporting clinical data onto each claim, which can enable the submission of cleaner claims and helps create a faster billing and reimbursement cycle.

The new approach tackles problems that continually gnawed at the efficiency of Nicklaus. Martinez recalls “a huge array of manual intervention” involved with billing procedures and tracking and securing delinquent payments.

Martinez notes the shift from paper-based to electronic billing initially created some efficiencies. Yet efficiency gains were limited as many organizations simply continued the same processes with electronic bills they had used with paper.

“With the old approach, the care of the patient was completed when the revenue process kicked in,” Martinez says. “There were a lot of flaws in that process. There was awareness about the bigticket items, but the small-ticket items could fall through the cracks. Perhaps a chest X-ray would be missed in the billing process. Or there would be denials on the back end, and we would have to pursue them with the insurer to get payment. There was a lot of wasted time and money.”

A Phased Approach To RCM System Implementation
With those challenges in mind, leaders at Nicklaus realized the real driver of efficiency resided in improving and streamlining the revenue cycle in ways that more closely linked the clinical and financial aspects of patient care and identified opportunities for increased transparency and faster, more accurate processing and payments.

To achieve that without being overly disruptive, Martinez says the hospital took a methodical approach to implementing a more efficient and integrated revenue cycle. They phased in the implementation, first getting the clinical side of the Cerner solution up and running.

“We left the existing patient accounting system in place while we implemented the clinical system first, which helped assure that we could focus on getting that running and work out any kinks,” Martinez says. “We initially had the clinical side interface back to the existing accounting system. When we were confident we were ready, we turned on the new revenue system and shut down the old system.”

While the two-step approach initially faced some resistance from within the accounting department, Martinez says it quickly gained acceptance once people gained a better understanding of the process and started to see clear results.

“Now when we take care of the patient there is no second step,” Martinez says. “We have all the managed care and billing information we need as the care of the patient proceeds. So if we order a chest X-ray, we don’t have to worry about a denial on the back end. The physician can still order the procedure, but has greater clarity around costs as the care of the patient proceeds. We have really improved the revenue cycle and processes, while also refining the way we think about care.”

Achieving Measurable Results, Culture Change
Martinez says the Cerner implementation, completed in July 2014, proved to be “the most successful installation I have ever seen” and effectively completed the hospital’s clinically driven revenue cycle. Nicklaus recently achieved HIMSS stage 6.

Indeed, the results since the Cerner implementation have been swift and significant. The team was able to submit claims within five days of the go-live date, and the hospital saw an immediate improvement in its clean claim rate. Nicklaus recorded a 3 percent increase in cash collections during the six-month period following the go-live date. In fact, the hospital reported its highest cash collection ever just three months after implementation was complete. Martinez says profits have increased by 7 percent, and he anticipates a double-digit percentage increase in profit this year.

Equally important is the cultural change that has occurred. Doctors and clinical staff are buying into the approach as they gain a greater appreciation for the stronger connection between the care being administered and the costs of that treatment course.

“The doctors are savvy and are aware this is now the world we live in,” says Martinez. “This does not stop or deter doctors from placing necessary orders; it just makes them aware that care of the patient will require authorizations. The doctors are more engaged in the entire process.”

Likewise, staffers in billing and accounting are seeing the clear benefits, Martinez says. “The revenue flows much more cleanly so the financial people can do a more effective job and take a more strategic approach to their jobs,” Martinez says. “We have a lot fewer denials, so we are not spending our time on the back end in discussions with insurers. The work has shifted from heads-down tracking bills to allowing more strategic thinking about how to refine our processes and make them even better.”

Finally, for patients, there is much more transparency at every phase of the process. They are informed of expected out-of-pocket costs early and throughout the process, reducing any last-minute billing surprises and providing clearer information on the actual costs of their care.

“Now that there is more fundamental and measurable evidence about the cost of care, we can get down to a precise number of what it costs to care for a patient with pneumonia,” Martinez says. “It creates greater awareness for everyone, which ultimately gets us to our goal of providing optimal care for our patients in the most cost-effective ways possible.”