In-House Billing May Be Hurting Your Healthcare Business

Without effective billing practices your hospital or medical clinic can’t remain financially secure, and that can ultimately affect how well you’re able to serve your patients. Some facilities manage to increase cash collections by analyzing and tightening the revenue cycle and offering updated training to in-house coding and billing staff. But it requires constant vigilance.

Some practices don’t realize the level of problems they had until they outsource revenue cycle functions.

Another option is outsourcing some or all revenue cycle functions. For example, your hospital or practice may choose outsourcing your AR to get this important function back under control. The first step to determining if something like this would be right for you is to evaluate what you may be missing by taking care of your various revenue cycle functions in-house.

You Could Be Stuck with an EHR That Doesn’t Serve You Well

Healthcare practices and hospitals must always be aware of containing costs, and one way many have tried to do this is with a free or low-cost electronic health records (EHR) system. While this can work for some facilities, being locked into a system that doesn’t offer the tools and features needed can ultimately become detrimental to effective billing practices. It’s important to read and understand terms and conditions whenever you incorporate a new software product of any kind into your operations and consider total cost of ownership.

You Might Second-Guess Coding and Billing Decisions

Last year, the switch from ICD-9 to ICD-10 meant a lot of retraining and relearning. Even if you have experienced, conscientious coding and billing personnel, there will be occasions when they experience uncertainty, and the result can be rejected or denied claims and slower payments. Since efficient billing practices are a cornerstone of a financially secure hospital or medical practice, second-guessing coding and billing decisions can be costly in terms of both time and money.

Your Cash Flow May Be Slower than Necessary

Having an efficient revenue cycle depends on many factors, like how long accounts spend in AR, your rejected claims rate, and how adept your team is at collecting patient payments for their part of the bill. Handling coding, billing, AR, and collections in-house requires meticulous attention to detail, often on a short deadline. It’s not easy to be meticulous enough if your team’s talents are spread too thin.

A strategy to address slow cash flow is essential for the health of your medical facility.

Attention May Be Diverted by Other Goings On

Hospitals and medical practices are among the most dynamic environments there are. There may be periods when days are predictable and your team can focus on the tasks they expect to focus upon, but there will be plenty of times when the unexpected happens. Naturally, you must prioritize patient care, and there will be times when this can cause efficient billing practices to be put on the back burner. Keeping your revenue cycle functions in-house means accepting that sometimes even important tasks will have to be postponed.

You May Spend Considerable Resources Keeping Staff Trained

Few industries are bound by as many regulations as the healthcare industry. Moreover, regulations change frequently, and on top of that, insurers all have their own ways of doing things. A trained staff is absolutely necessary for the functions you provide in-house, but training can be expensive and periodically take staff away from their normal tasks. You can’t simply cross your fingers and hope everything will be OK, because running afoul of regulations and insurer requirements can be quite expensive.

Your medical facility exists to help people recover and maintain their health, and that’s what you want to focus your primary efforts on. Maintaining good billing practices, however, also requires dedication, so it’s no mystery why, for example, outsourcing your AR may cross your mind. There are many ways to increase cash collections, but all require attention and commitment. You could be missing out on that commitment level if you keep all your revenue cycle functions in-house. Selective outsourcing, or outsourcing multiple functions can be the wisest investment of your resources, allowing you to concentrate on your patients, confident that your revenue cycle is taken care of.

HFS (Healthcare Financial Systems) has worked with hundreds of healthcare providers over the past 18 years to optimize revenue cycle management and improve collections. With our involved, hands-on approach that incorporates both service and technology, plus the flexibility our clients demand in their RCM solution, HFS invites you to schedule a confidential consultation. Learn how our RCM programs benefit organizations like yours. If you prefer to talk by phone, please call us at 888-419-4569.

Preparing for the Revolution in Revenue Cycle Management

The fee-for-service (FFS) payment model dominated the medical reimbursement system for decades. In this payment model, all the services a physician or other healthcare provider delivers are paid for separately. Over the years it became clear that this payment model encouraged over-utilization, because patients were well-shielded from costs and physicians were paid more when they performed more services, even if those services weren’t strictly necessary.

For decades, the fee-for-service reimbursement model dominated the insurance landscape.

It’s easy to see why an FFS model ultimately becomes unsustainable, because insurers can’t indefinitely protect policy-holders from rising costs. One aspect of recent healthcare reform efforts has been a shift away from the FFS model by the government programs, Medicare and Medicaid. Private insurers are following suit. Value-based reimbursement models include bundled services agreements, and accountable care, where incentives are for providers to deliver the best care for the best value, and reduce unnecessary procedures.

The shift from FFS to value-based reimbursement has brought many challenges with it, and they have come at the same time as other important transitions, such as last year’s change from ICD-9 to ICD-10 coding. The impact on revenue cycle management has been significant. Many practices have concluded that they require new tools and technologies to cope, or that they come out ahead by outsourcing revenue cycle management. It’s nothing short of a revenue cycle management revolution.

The Shift Toward Managing Populations of Patients

When Medicare came into existence half a century ago, cost- and charge-reimbursement was the norm. That evolved toward so-called prospective payment systems to cover acute hospital care in the 1980s and 90s, where each case was categorized into a diagnosis-related group, each of which had a payment “weight” associated with it.

The passage of the Affordable Care Act, along with value-based payment goals for Medicare, have given the system a further push away from FFS and toward value-based payment. The Center for Medicare and Medicaid Innovation is developing new models with the goal of better healthcare delivery, wiser healthcare spending, and a healthier population. One goal is to increase the proportion of Medicare payments tied to quality or value to 90% by 2018. Which all sounds great, but how will revenue cycle management (RCM) have to change as a result?

Key Revenue Cycle Management Challenges

Many RCM challenges are the same as they always have been, such as coping with the occasional staffing shortfall. Accounts staying in Accounts Receivable (AR) for too long is a problem that’s existed for ages. That will continue, regardless of what payment model everyone eventually settles on. There’s nothing magical about value-based reimbursement that will eliminate rejected or denied claims either. Workflow processes accomplished by trained, conscientious personnel will be just as necessary, regardless of the nuts and bolts of RCM.

RCM challenges won’t go away completely under managed care, but will evolve.

Technology Is the Key to Succeeding

Technology as an answer has become somewhat of a cliché. That’s unfortunate, because technology has such a critical role in value-based RCM. For example, technological tools that can use a sophisticated rules engine to quickly identify non-viable accounts and that can ensure that each type of invoice generated by a healthcare provider is accurate will be differentiators that can help providers stand out from their competitors.

Technology will gather critical benchmark data so that providers and payers can measure progress toward their goals, whether they pertain to efficiency, clean-claims, or average days in AR. The results will be non-clinical staffing that is closer to optimum and lower overhead costs for providers.

Solving Problems and Improving Outcomes

Healthcare providers, whether they keep RCM in-house or choose to outsource, are all ultimately in pursuit of the best possible use of staff time and resources through:

  • Lower organizational costs
  • Closure of all aged accounts receivable
  • Efficient appeals for claim denials
  • Better understanding of resources for RCM

Since 1998, HFS (Healthcare Financial Systems) has worked with hundreds of healthcare providers to optimize RCM, improve collections, produce more accurate coding, increase clean-claims rates, and ensure compliance within an increasing thicket of regulations. HFS offers a hands-on approach that leverages both service and technology, with the flexibility our clients need to have the exact RCM solution they need. We cordially invite you to schedule a confidential consultation on how our RCM programs can help your organization. Or, if you prefer to talk by phone, we invite you to call us at 888-419-4569.

Outsourcing Makes Your Accounts Receivable Headaches Disappear

The revenue cycle is especially complex in the healthcare provision industry because of the additional factor of third-party payers and how they affect billing and collections. Changes in the insurance industry have put an even heavier burden on non-clinical staff at medical facilities. Trying to increase cash collections is imperative for the medical provider that wants to ensure smooth cash flow.

Erratic cash flow can be a serious problem for a medical practice.

Accounts receivable (AR) can be one of your most valuable business assets, as long as it’s managed properly. An increasing number of medical providers are looking into outsourcing AR for a tighter revenue cycle, better collections, so personnel can focus more closely on the core business process of caring for people. Here are just a few of the problems outsourcing your AR can solve.

Problem: Patients Are Responsible for a Larger Share of their Bills

The high-deductible health insurance plan is the norm today, with patients themselves being responsible for thousands of dollars of out-of-pocket costs before their insurance coverage takes over. Collecting co-payments at the time of service is more important than it’s ever been, yet more medical care is also billed directly to patients. Many medical providers don’t have the resources for a full-time AR specialist or department.

Outsourcing your AR allows your team to concentrate on day-to-day collections, such as co-pays, and on the critical tasks involved in coding and billing claims properly. Benefits include fewer errors and fewer accounts that linger in AR unnoticed.

Problem: Your Staff Spends Too Much Time Dealing with Accounts Receivable

Managing AR is more complicated than it may appear at the outset. Trying to coax payment from a patient or insurer becomes progressively more difficult with the passage of time. The longer an account stays in AR, the less likely you are to collect on it. The tasks of calculating average number of days that accounts spend in AR and determining the best way to pursue collection of those that have spent the most time there can take up significant staff time.

When you outsource your AR, however, you can be confident these tasks are in the hands of people who specialize in AR and collections. Your non-clinical personnel are then freer to focus on tasks like insurance verification, accuracy of patient demographic data, and expedient coding and billing.

Let AR experts handle your accounts receivable so you can focus on patient care.

Problem: Average AR Days Is Unreasonably High

Have you calculated the average amount of time accounts spend in AR before they’re collected (or worse, written off)? Sometimes businesses don’t make this calculation for fear that the number will tell a story they don’t want to know. But you need to face facts. The longer the average account spends in AR, the more money you’re leaving uncollected, and the more you could potentially end up having to write off.

The right revenue services provider, however, can bring down the average number of days that accounts spend in AR, and will have a workable strategy for pursuing collection of these accounts. When your provider reduces average AR days, you’ll find that cash flow is less “lumpy” and that you’re writing off less bad debt.

Problem: AR Issues Are Causing Accounts Payable Problems

Your practice has a place in other business’s accounts receivable. While you want to take the time you need to pay your obligations, if you take too much time or become delinquent, you could be faced with vendors who require pre-payment, and, in general, a more difficult time financially. If your accounts receivable isn’t well-managed, you could be slow taking in the money you need to keep up with your own bills. This is unsustainable and harms your finances, sometimes severely.

If your AR problems are causing problems with accounts payable, then outsourcing your AR should be a strong consideration. Outsourcing allows you and your team to work on in-office processes that improve cash flow, like raising your “clean claims” rate and confirming coverage when patients schedule appointments.

Outsourcing your AR isn’t a matter of “giving up.” In fact, it can be one of the smartest business moves your practice will ever make. Putting AR into the hands of experts can yield a positive return on investment while allowing your in-house coding and billing team to perform their tasks to the highest standards.

5 Ways Outsourcing AR Increases Healthcare Practice Success

Outsourcing accounts receivable makes sense when you consider that in the typical multispecialty practice, almost 17% of accounts receivable have been outstanding more than 120 days. Ideally, that figure should remain below 12%.


Outsourcing accounts receivable can help you shorten the healthcare revenue cycle.

Eighty-three percent of hospitals turn to outsourcing accounts receivable to some extent, and 68% of large physician groups (those with more than 10 practitioners) outsource at least some collections and claims management tasks. Results are impressive, with most hospitals that outsource accounts receivable seeing revenue increases of over 5%. Here are five ways outsourcing accounts receivable increases the success of healthcare practices.

1. It Allows Attention to Process Issues Rather than “Putting Out Fires”

When a healthcare provider outsources accounts receivable, they can focus attention on internal process improvements, without worrying that a short-term issue related to accounts receivable will divert attention from important functions. Outsourcing accounts receivable allows practices to spend more time on their core business practice of providing healthcare services, and less time on collections.

2. Outsourcing Ensures Trained Specialists Handle Your Accounts Receivable

When you outsource, assuming you choose a high quality provider, you can be confident that the people handling your accounts receivable are fully trained for every aspect of that responsibility. Managing accounts receivable in-house often means that people with many other responsibilities are assigned to follow up accounts. It’s all too easy for attention to accounts receivable to be diverted elsewhere.

3. It Allows You to Avoid Personnel Crises

Suppose your small practice has one or two staff members assigned to manage Accounts Receivable. What happens if one of them leaves? Suppose both are out sick for several days. How far behind might your practice become in terms of cash flow? When you outsource accounts receivable, however, these worries go away. Your provider ensures that sufficient numbers of trained personnel are available to devote attention to client accounts at all times.

4. A Top Provider Reduces Fears About Audits

The Office of the Inspector General (OIG) isn’t going to stop auditing practices to guard against fraud and abuse. If the idea of facing an audit elicits dread, then outsourcing accounts receivable may be a positive step toward addressing that fear. Proper management of your billing functions, including accounts receivable, is essential to being prepared should your practice be the subject of an audit.


The right outsourcing partner helps allay fears about coping with audits.

5. It Saves Healthcare Practices Money and Time

Healthcare practices outsource accounts receivable for obvious reasons: It saves money and time. You don’t have to hire staff and equip them with the tools they need to take care of accounts receivable, but are able to leave that to specialists devoted solely to that endeavor. The time and money you save can go toward building core business competencies, expanding your practice, and strengthening relationships with your patients.

Metrics That Indicate Outsourcing Accounts Receivable Is the Right Move

You can spot check a few key metrics to get an idea of whether outsourcing accounts receivable is your smartest choice:

  • Cash collections as a percentage of adjusted net patient service revenues – which is an indicator of overall revenue cycle management effectiveness
  • Claim denials as a percentage of net revenue – which can indicate trends in how much lost reimbursement is written off
  • Bad debt as a percentage of net revenues – which shows how well your self-pay collection and financial counseling are working

Accounts receivable tasks result from actions taken by patients, coding and billing staff, and clinicians. Every department involved even tangentially in revenue cycle management contributes to the tasks that Accounts Receivable must cope with. Hospitals and physician practices of all sizes have discovered the advantages of outsourcing accounts receivable and have experienced improved revenue cycle management as a result.

When you outsource accounts receivable, you address numerous pain points of the revenue cycle management process. At HFS, we have over 15 years of experience working with hundreds of healthcare organizations and streamlining revenue cycle management. Our hands-on approach to outsourced accounts receivable, coding, and compliance have helped us build a solid reputation as experts on leveraging service and technology to improve revenue cycle management. We invite you to contact us at any time to discuss your requirements.