As the pressure on top and bottom lines grows, many healthcare organizations are focusing on revenue integrity as a way to improve margins. Part of this effort requires lowering overhead costs by driving efficiencies into their revenue cycle operations. These streamlining projects include consolidating business office functions to minimize duplication of effort around registration, insurance assignment and verification and customer service on both the physician and hospital sides of the organization.
An increase in merger and acquisition activity continues in the healthcare industry and this, too, can cause the need for a business office consolidation.
Whether driven by a cost cutting initiative or merger, the consolidation initiative means merging the entire revenue cycle. Combining tasks, workflows and technology to create economies of scale can result in significant cost savings.
Centralizing business office functions can be challenging. Before you attempt to take on such an ambitious project, you must be sure your organization can carry it out successfully. You need to understand the inherent differences between the organizations or divisions you plan to consolidate. You should start with a comprehensive assessment of your people, process and technology to provide a baseline from which to proceed with the project.
This seven-point checklist will help you determine your readiness and will guide you in focusing on the areas you should be addressing as you begin your consolidation.
1. Establish your primary goals for the consolidation
Begin with an honest evaluation of the reasons you are considering merging or consolidating. These could include:
- To grow larger to hedge the competition and gain an edge in a competitive environment
- To gain negotiating leverage with payers and vendors
- To streamline operations and reduce costs
- To improve productivity and efficiency
- To increase patient satisfaction through single threaded patient engagement
- To allow more rapid access to a wider range of consolidated financial information and operating detail
According to a recent HFMA report [1], the value of revenue cycle consolidation involves two key questions: will there be benefits to the merging entities and will those benefits ultimately be passed on to consumers in the form of higher quality care, lower costs or both. Before you proceed, you should know, document and communicate your overall goals.
2. Set up your governance structure
Setting up a strong governance structure can help you avoid the many pitfalls that lurk in a consolidation project. Identify a visionary with deep revenue cycle knowledge within the organization who can lead the charge. This person could spearhead the assessment of cultural issues in the billing offices, identify potential leaders who can facilitate the transition and gauge the organizational willingness to change.
Senior management must fully support the governance team which should include cross-functional representatives from all critical business functions – legal, finance, compliance, clinical, business office, technology, facilities, human resources and public relations/marketing. Every aspect of the business will be affected in a consolidation project so it is best to have a broad governance team to ensure that the interests of the entire organization are kept front and center when making decisions.
Strong governance is crucial to help vet decisions involving changes to systems, personnel and workflow and to ensure a single source of direction. Establish an efficient vetting process that will help expedite the decision making process.
3. Review your financials
Conduct a comprehensive review of the financial state of your organization. Analyze your financial statements including the P&L, balance sheet and cash flow statement. Examine all purchased services, capital expenditures and any other outlays that can be targeted for cost reduction.
Review and understand the revenue cycle KPI’s to identify under performing groups or departments. Complete an ROI analysis of gained efficiencies, cost reduction and cash acceleration to be realized through consolidation. This ROI analysis should be the foundation of your internal “selling” of change with impacted groups throughout the organization.
4. Evaluate your people
Evaluating your personnel is a critical component of the overall assessment. Review your organizational chart, open positions, staffing details, payroll schedules, compensation policies, and benefit summaries. Perform a pay grade analysis and look for areas to normalize job descriptions and target redundant positions that you could eliminate. Review productivity reports to assess the strength of your staff to help in making staffing decisions.
You should also review quality results and outcomes. Evaluate the quality of individual work performance when considering staff consolidation and identification of your “star players.”
Assess the skill levels of your management personnel. Consolidation requires sophisticated management techniques to meet the demands of right sizing the organization so be sure your management team has the necessary skill set. The management personnel are your ongoing “change agents” pre and post consolidation, so they must buy-in and take ownership of the consolidation efforts.
5. Audit your processes
Review the policies, processes and workflow of the merging entities and if different, find out why. The key is determining which, if any, represent best practices. These can become part of the foundation of the consolidated organization. Review the reporting metrics, productivity measures and quality monitoring in every department. Include a timeline for internal and external changes as well as a communications matrix for sharing information with staff and patients before, during and after implementation.
Guard against a “this is the way we’ve always done it” attitude. Consolidation presents a perfect opportunity to introduce fresh, new workflows that eliminate redundancies that may have crept into existing processes. A representative for all the merging groups should participate in the review and development of any new processes, procedures or workflows. Each group and department will inevitably feel “their way is the best way.” Having representation from the staff/function level is critical to making the final decisions on best practices and getting “buy-in” for effective implementation of consolidated workflows.
Consolidation provides an optimum time to look at performance metrics, level set expectations, establish measurements and set goals.
6. Assess your technology
Merging technologies is often one of the most challenging aspects of a consolidation effort. Analyze each technology stack to determine which is “best in breed” and most effectively meets the needs of the consolidated operation. Establish which of your service lines are strong and which may require partnering with a system that will add synergy and excel in services that your current group does not.
Moving to one, integrated system provides the best opportunity to reduce cost and resource time and maximize the ROI of the consolidation effort. One system that provides consistent workflows across all entities enables a true “apples to apples” comparison across all divisions and locations. If you choose an existing system, you need to guard against the appearance that the team from that entity is in charge and that their workflows are to be adopted.
Any systems decisions will involve a review of current vendor contracts to determine the approach to take to consolidate or replace third party vendors that handle bad debt or clearinghouses. You will also need to assess the impact of system change to payer contracting.
7. Determine Patient Impact
Successful consolidations must include ways in which the combined organization can pass the benefits of consolidation on to the consumer.
Consolidation opportunities that can improve patient satisfaction and keeps the patient at the center of planning and implementation include combining registration and billing activities. This enables centralized customer service and single statements which simplifies the patient experience. You can also streamline patient access and engagement when it comes to financial counseling and other interactions.
The goal is to create a “single-threaded” patient engagement model that centralizes all the touchpoints between the patient and the organization. This includes financial counseling, communication, billing, and collections.
[1] Health Care 2020, Consolidation, an HFMA Report, Fall, 2016
