'A new future for revenue cycle'
You'd be forgiven for thinking revenue cycle management technology is a bit, well, boring. You'd also be wrong. The coming years are going to see some big changes in the way hospitals get paid, and the IT they use to track when and how they get paid is going to have to change as well.
So strap yourself in and put your helmet on.
"There's a new future for revenue cycle," say John Hoyt, executive vice president of HIMSS Analytics. "We're predicting the future here."
RCM tools are a varied cohort. Many of them are fairly standard business technologies, such as admissions/discharges/transfers and registration systems, credit and collections tools and patient billing and scheduling technologies.
All of those are well established at U.S. hospitals. The market is about as saturated as can be, in fact, according to HIMSS Analytics numbers. Penetration is as high as 97.9 percent for patient billing tools; all the above-mentioned technologies clock in at 90 percent or more.
Still, even those well-situated types are probably soon due to be replaced. Most have been installed for a decade or so already.
"We're looking at ages 8 to 11 years for these revenue cycle systems" says Hoyt. "Patient billing is different from registration is different from scheduling, but they're generally up there: 8 to 11 years. And that's basically the kind of thing that the auto industry watches. How old are the cars on the road? There's a point at which people just have to start buying new cars."
There are more fundamental changes in the offing, he says.
"We have a new future with Medicare on payment reform. We've been nipping away at trying to save money in Medicare for years, but we need fundamental change, and we all know it. And it's coming in the form of ACOs or bundled payments and this type of thing."
Says Hoyt: "The revenue cycle systems we've had, for the past 10 years, are not prepared to do that."
Further down HIMSS Analytics' list of RCM tools, there's a class that's so-far seen less market penetration than standard business technologies. Electronic data interchange (electronic billing and receipts, basically) is well established at nearly 85 percent of hospitals, for instance, but past that, other species of IT are still relatively immature.
Take contract management technology, which is essential for the new world of bundled payments: It's still making inroads at 67.7 percent penetration. Medical necessity checking content? ("I've got a diagnosis, and I've got a planned procedure," Hoyt explains. "Do they make sense together?") That's at barely 59 percent. Enterprise master person index technology is in just over half of facilities (53.3 percent).
Those are all key to a new era of payment reform. And more and different technologies may be soon to come.
"We believe that the industry will respond with some new revenue cycle capabilities, and that people will buy them," says Hoyt. "But they're not going to buy them until they've gotten all they can get out of meaningful use." Oh, yes, that.
So, yes, we're probably a few years away from a wholesale reshaping of the RCM landscape. But change can come fast.
"The vendors are telling us that they're preparing, and they're looking at revenue cycle redesigns to take into account bundled payments and ACO reimbursements," says Hoyt.
'We think there's going to be a boom'
Put simply, the post-reform payment landscape requires more than what most RCM tools are offering right now.
Take bundled payments, where a hospital gets one payment for the care provided at the hospital and by the physicians who provided the care.
Consider a heart surgery, where a cardiac surgeon works on a valve replacement. Even though he enlists the help of a "cardiologist and a pathologist and an internist, whatever, just one check is going to the hospital," says Hoyt. "It's up to the hospital to figure out how they're going to pay all their buddies."
And all of that has to be covered by a contract, and that requires contract management technology.
"If a hospital wants to get in on a bundled payments program, this is the fun you're going to have," he says. "You've got to figure out how you're going to allocate these payments. Do you need an accounting system to do that? You betcha. And are we prepared to do that? No, absolutely not."
Or take accountable care organizations. "There are at least three flavors of ACOs," says Hoyt. "The more mature ones will be per-member, per-month. Not a lot of RCM systems can handle the revenue of per-member, per-month. And the expense of how much healthcare the patients are consuming to show us if we're making money on a per-person basis. That's the future."
In the meantime, "bigger health systems, in bigger markets," may be in decent shape, he says. "When you are a multi-hospital system in a fairly well-populated environment, and you have good medical staff relationships, you could be in a position to be an ACO and survive," says Hoyt.
"But ACOs and 'HMOs without walls' and being paid per-member, per-month, that's a whole new world that 98 percent of hospitals are not ready for."
Soon, that will change: "We think there's going to be a boom" in these new RCM capabilities, he says.
Well, maybe not soon, exactly. But sooner rather than later.
"We're still going through meaningful use Stage 2," says Hoyt. "We're seeing some progress. I think we're at least three years off from seeing an explosion. I would bet it's three to five years, and that we're going to see a lot of revenue cycle changes."