Building an Effective Cost to Collect Strategy
In February 2020, we published a paper, “Building an Effective Cost to Collect Strategy.” The paper is focused on guiding revenue cycle leaders to finding the best way to maximize their yield. The COVID-19 pandemic has put many healthcare provider organizations in an unprecedented, compromised financial position that will take a great deal of time to recover from. As the immediate impact of the pandemic begins to subside and providers look to get back to resuming services and core business functions, there is an opportunity, if not a necessity, to rebuild and reimagine the revenue cycle operation.
In this update to our February paper, we share our latest thinking on the key areas to evaluate in the age of COVID-19 to find the right balance: existing vendor optimization and automation, workforce management and virtualization, strategic outsourcing/insourcing and enhanced operations and performance. A coordinated and well-planned effort will jump-start a rebuild and produce more cost-effective and efficient operations.
Organizations will need to focus on accelerating cash to a much greater extent. Leveraging and optimizing vendor relationships through tightening handoffs and minimizing lack of account activity will improve cash acceleration. Enhancing performance requirements and negotiating better rates with your vendor partners will also help improve revenue and reduce cost. Additionally, rebuilding operations by using more automation (either through system optimization, traditional RPA or AI-enabled RPA) will help incrementally address the volume of work at a lower cost basis while focusing staff on the higher-value-added activities.
The COVID-19 crisis required many organizations to enable a virtual workforce without the benefit of strategic planning or preparation. In many cases it was a reactive response to enable as many staff as possible to work remotely and may not have fully contemplated the most optimal or well-positioned solution. During the post-surge move back to operations, organizations should evaluate what worked and what didn't, and consider what could be leveraged into the new world environment and find the right mix of what could stay virtual. As more work remains virtual, organizations will be able to consider their brick-and-mortar footprint supporting revenue cycle functions.
Functional outsourcing is another area that can provide significant cost reduction opportunities which can support a COVID-19 margin improvement effort. Organizations should now evaluate potential outsourcing options throughout the revenue cycle by evaluating the ROI in discrete areas (e.g., coding, financial counseling, billing and collections, etc.). Depending on the financial situation at hand, a review of fully outsourcing all functions could be considered.
Now more than ever there is a need for routine, critical analysis of performance and outcomes. Proactively monitoring key performance indicators and primary statistics must be in place to assess performance and ensure ongoing insight to where there are areas of opportunity. Revenue cycle leaders should take this opportunity to rebuild their revenue cycle through the use of analytics to identify resource needs and build flexible staffing models to adjust accordingly. Rapid improvement will be necessary, and monitoring will enable an agile process with required shifts and pivots when possible.
The current climate is affording revenue cycle leaders the opportunity to rebuild and reimagine their operations. Given many organizations are in the process of reactivating and aiming to recoup volume, doing so in a more efficient manner will maximize yield. Now is the time to develop a strategy that focuses on cost to collect and defines the subsequent optimal resourcing, both internal and external. Executing against this strategy will drive organizations to a more sustainable and adaptable model to carry them into the future.