This article appears in the June 2014 issue of HealthLeaders magazine.
Cost containment and revenue cycle activities involve buttressing the organization's fiscal health through smart spending and ensuring funds that are owed to the organization are, after all, delivered to the organization. Traditional approaches to cost containment often are part of the annual budgeting process, directed by the finance team within administration. The conventional activity of the revenue cycle function is largely to confirm the accuracy and completeness of submissions to payers and troubleshoot claims denials.
With challenges to reimbursements—including the pending need to bear risk and deliver value-based care, and a payer community that has become more aggressive about claims denial—leaders are looking for cost containment and revenue cycle to contribute to financial health in more strategic ways. Intelligence Report research results suggest that care redesign and care standardization can lead to increased provider productivity and can help drive waste out of the care delivery system. IT and analytics remain tactical tools to improve revenue cycle results. And with clinical documentation, some are focusing their improvement efforts on the hospital floor, helping the clinical team ensure that services delivered are completely and accurately recorded.
Gains from care redesign and standardization
At the largest organizations, those with net patient revenue greater than $1 billion, more than half cite care standardization (55%) and care redesign (53%) as being among the top sources of cost-containment gains. Smaller organizations generally rely on more traditional means to achieve gains, and only 26% (small) and 36% (medium) cite care redesign as among their top high-dollar factors in cost containment.
Change is often difficult, and when the process to be redesigned is a clinical process, buy-in from the clinical team is necessary. Daniel J. Moncher, FACHE, MBA, executive vice president and CFO for Firelands Regional Medical Center, a 233-staffed-bed nonprofit hospital with a medical staff of 200 in Sandusky, Ohio, describes the challenge. "[Some might have the perspective] that administration is telling them how to treat their patients," he says. "But remember, they're the ones at the bedside. They're the ones with the training. They're the ones that have the ultimate responsibility for treating the patients."
Ann Madden Rice, CEO of the University of California Davis Medical Center, a 619-licensed-bed acute care teaching hospital in Sacramento, California, says the key to earning support for clinical initiatives is to focus on clinical results instead of financial results. "Alignment isn't going to happen because you're telling physicians you're saving money. It's pretty hard to be passionate about that. But alignment will happen if they can see the quality benefit and see that their patients are more satisfied with the care they've received and have better outcomes."