Revenue cycle poised for big rethinking
There is. But not just yet. Since 2013, there's been "no change" – at least not anything appreciable – in the U.S. revenue cycle management market, says Hoyt. Still, the fact remains that "the average system out there is quite old – nine years."
[See also: RCM market expected to grow by leaps]
That said, shifting imperatives for healthcare finance mean big changes are necessarily in the offing. It may just take a few years for other priorities to get squared away.
"The market is focused, of course, on clinicals," says Hoyt.
But sooner or later meaningful use will be old news, and then it's time to look to the future of accountable and value-based care. Simply put, most RCM systems aren't well-poised for a future where healthcare is rewarded for quality not for volume.
[See also: Revenue cycle ripe for radical change]
"Once the bubble begins to burst on clinicals, something's gonna have to give on revenue cycle," he says.
At the very least, most of those systems are getting pretty long in the tooth, and the trend toward hospital consolidation means more and more of them will soon be getting yanked.
"Another statistic for year end is that the number of hospitals per integrated delivery system took a big jump last year from 6.4 to 7.1, which tells us that the acquisition spree has not slowed down," says Hoyt. "Consolidating systems, frankly, is probably driving some things that are changing in the market now. We saw last year a little uptick. It's replacements, due to mergers and acquisitions."
Still, for the most part, the market is relatively stable. But that could – should, must – change in the next handful of years, some observers say.
"Healthcare is the only industry that has a revenue cycle with a designated subsector of companies that manage it," said Wieland, and "it costs 20 to 30 cents on the dollar to cross a trade" – compare that to Wall Street, which does the same for less than one cent.
There's an "enormous opportunity" to take costs out of the process "by actually fixing the revenue cycle," he said. "And by fixing I don't mean by incremental process improvements. I mean blowing it up."
Hoyt, too, thinks there are big changes afoot in the approach to revenue cycle – fundamental rethinkings of how it's done. "We've got these nice little seven-hospital systems," he posits. "But the real savings is (potentially) these 20, 30, 50, 200 hospital systems with one business office."
Banks do it all the time, after all, he says. "Go to North Dakota and look at how much processing is done there for credit cards. You've got to centralize this business back office stuff and rip out costs. We know 23 percent of our cost is administrative. If you can automate that and consolidate it into one function, yes, there's savings to be had."
Still, again, meaningful use and its attendant concerns means that won't be happening quite yet.
"We're going to run through 2016, for sure, on this clinical bubble, maybe 2017," says Hoyt. Especially for hospitals "in a market that has a lot of competitive contracting, I think you're going to see a revenue cycle uptick beginning in the mid- to late-teens of this new decade.
HIMSS Analytics data shows where the market is moving. Functionalities such as analytics, claims attachment tools, billers and dashboards are on the rise.
"It's the analytics," says Hoyt. "Or replacing with a revenue cycle that delivers analytics – or has better analytics – for managing the old revenue cycle.
"Look at the vendors who have created new revenue cycle systems in the past four or five years," he adds. "Siemens did a rewrite. McKesson Paragon is relatively new. Cerner did a rewrite. Allscripts – a rewrite of the revenue cycle. They were getting into position because they knew they had old products that didn't pass muster."
Then there are vendors like athenahealth, whose offering is very different.
For small practices, "athena says I'll do your revenue cycle and I'll collect your bills for you," says Hoyt. "I think there's a great market for that. Because the physicians who go into practice do not want to be entrepreneurs as much as they used to. When 52 or 53 percent of residents today become employees of integrated delivery systems, it tells you that the whole market has changed."
For most healthcare organizations, though, business intelligence, working in service of the revenue cycle, will be key in the coming years, says James Gaston, senior director of clinical and business intelligence at HIMSS Analytics.
"Analytics maturity enables the healthcare organizations to transition from fee-for-service to these new reimbursement models in an effective way," says Gaston. "As we see a shift from fee-for-service, there are revenue gains because you're not chasing every little claim for every reimbursement."
That means that the "revenue cycle for new types of reimbursement is very different than the traditional revenue cycle which is set in stone and, as you noted, convoluted," he says.
"Analytics allows you to look at how you're making your money, where your money is coming from and going, whether your clinical care is delivering the value it needs to deliver – but at the same time it also helps you understand where your expenses are, where your revenue is, and how to balance and optimize that."
Healthcare as a whole has "been in a fee-for-service mindset for so long," says Gaston. "Organizations are entrenched in that process. There are certainly some leaders and exceptional organizations out there that do a good job with it, but very few understand how to negotiate or contract or bundle outside of that fee for service model."
Once upon a time, Gaston worked at Blue Cross Blue Shield. Even then, he said, "when we would talk about bundling things, everything was based around the concept of an individual claim, rolling up the claims and managing the claims."
This despite the fact that "claims are, in theory, irrelevant to managed care, bundled care, accountable care, where you're responsible for a population," he says. "It's just a way to track the individual episode: the receipt."
And speaking of the "individual episode," there's another wildcard for revenue cycle: ICD-10. Now that (as of this writing, at least) there's still no firm date set for conversion, a whole lot of planning has been thrown into flux.
"The vendors have done the work to retrofit," says Hoyt. "It may have been hard as hell, and it may slow down the system because we're now dealing with three times more codes, and I'm sure the vendors would like the opportunity to rewrite and redesign using the new code set, but they had to retrofit.
"There's a point where they've got to get the clients on a new version," he adds. "Because it's such old technology. And we're gluing pieces on like ICD-10. It's just another nail in the coffin of old systems."
Just like Y2K was an opportunity for some vendors draw a line in the sand and cease support for some outmoded pieces of technology – "an opportunity to shoot some (old) products," so might ICD-10, whenever it may arrive, be the opportunity for vendors to mark the pivot point toward a new era.
"Are these (current) systems ready for payment reform and ACOs and bing responsible for a population? The answer is fundamentally no," says Hoyt. "People are just hiring analysts and building spreadsheets and maintaining separate databases. There's a point at which we all get sick of this and replace the systems.
"But the CFOs today have their eye on getting checks in the mail for meaningful use," he says. "Once that's over, I've got to believe they're going to start ripping out old systems to get ready for a new one."