Challenges & Solutions

• Administrative costs now account for as much as 40% of U.S. hospital expenses. It’s estimated that hospitals are spending $10 billion annually dealing with insurers’ prior authorizations alone.
• Nearly 200 rural hospitals have closed over the past two decades, and hundreds more are at risk of closing because of financial strains.

• Recent studies show that clinicians spend as much as 50% of their time on administrative functions when they’d prefer to focus on patient care.
• Around 50% of physicians report feeling burned out. They say a big reason for this is that they must spend so many extra hours on administrative tasks.

• Nearly 80% of physicians surveyed said issues with the prior authorization process “sometimes” or “often” lead patients to abandon treatment.
• About 25% of U.S. adults say they recently skipped or postponed getting healthcare they needed because of the cost. Administrative burdens are a big factor in the prices they must pay: The U.S. spends almost five times more per person on administrative costs than the average paid by other wealthy countries.

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Make your electronic health record (EHR) system work for clinicians, not the other way around. Often the system creates new steps that bog down clinicians and get in the way of patient care, instead of helping clinicians work better and enhancing patient care. Here’s how to assess where your EHR system has veered off course and get it back on track.

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Ask

Nothing is more critical than gathering insights from clinicians and other EHR system users. Consider surveys, focus groups, and department meetings. Include these core questions:

• How are you currently using the EHR system?
• How do you want to use it?
• What are your biggest pain points and bottlenecks?
• How is the system interfering with your clinical workflows?
• What changes would you make so that the system supports your clinical workflows?

Ask users every year. To maintain the health of your EHR system, you need regular checkups.

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One EHR system required a physician to perform 32 clicks to order and report a flu shot.

Source

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Act

• Based on user feedback, adjust your system to eliminate unnecessary steps and support clinical workflows. Start with the easiest changes: Even small steps can yield significant improvements, and they show that you’re listening.
• Provide EHR system training to all users annually and each time the system is updated, and regularly refresh training content. Review training satisfaction and effectiveness; the Kirkpatrick Model is one way to do this.
• Make sure you’re clearly communicating data entry practices to all users. Use prompts or mandatory fields so that users don’t inadvertently omit key data.
• Implement cross-system interoperability by integrating your EHR system with other systems, such as pharmacy and patient portals, and connecting it to national health information exchanges. Interoperability helps reduce misdiagnosis, streamline treatment plans, and improve the rate at which medical claims are processed and paid.
• Reward or recognize your best system users. It’s a good way to motivate EHR system users and build a culture of efficiency.

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Optimizing administrative processes can free up resources to reinvest in patient care, clinician recruitment and retention, innovation, and other priorities.

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Focus

Researchers estimate that U.S. hospitals and physician groups could reduce spending by as much as 20%, or $20 billion, annually by optimizing their revenue cycle management (RCM). Experience has shown that focusing on five RCM functions delivers the most gains in efficiency:

1. Patient registration and insurance eligibility
   1. Accurately capture demographic and insurance information. These steps are crucial for billing and reimbursement later in the revenue cycle.
   2. Use a consistent discovery process to verify insurance coverage and the extent of coverage for services rendered. This helps prevent claim denials.
2. Medical coding
   1. Accurately code a patient’s diagnosis, procedures, and services to ensure proper billing and reimbursement.
   2. Properly document patient care and adhere to coding guidelines; both these steps reduce claim denials and compliance issues.
3. Claim submission, management, and follow-up
   1. Track the status of submitted claims.
   2. Identify and resolve claim errors or denials.
   3. Work with payers to expedite accurate and timely claims submission and payments, rather than following up on a claim-by-claim basis.
4. Payment posting and payer relations
   1. Reconcile payments with claims.
   2. Identify discrepancies.
   3. Apply payments to the appropriate accounts receivable.
5. Denial management, appeals, and patient billing and collections 
   1. Identify the root causes of denials.
   2. Appeal denied claims when appropriate.
   3. Implement strategies to prevent future denials.

Benchmark

Benchmarking your performance against industry standards will help you identify your biggest problem areas — and where you have the most to gain. At a minimum, you should aim to achieve the following industry standards:

• Net days in accounts receivable: 40–45
• Share of accounts receivable greater than 60 days: 15%–18% (after 60 days, the likelihood of payment decreases significantly)
• Clean claim acceptance rate: > 90% accepted upon initial submission
• Coding accuracy: > 95%
• Initial denial rate: < 5%
• Days not final billed: 4–5 days

Act

• Automate. For example, you could use technology to automatically check clinical guidelines, insurance coverage, and other relevant information to determine whether a medical service, test, or medication requires prior authorization.  
• Perform charge capture audits. Use them to identify and address weaknesses in accurate documentation of patient care and assigning medical codes — two key components of the process by which providers get paid for services.  
• Build a claims editing process. Even minor errors or technological gaps can cause a claim to be rejected, leading to rework and payment delays.  
• Adjust training content to reinforce how to avoid the mistakes discovered through internal audits and claims editing.
• Establish a cross-functional revenue integrity team that includes clinical documentation, medical coding, billing, and accounts management. Instruct the team to review industry trends, discuss challenges, develop process improvements, and execute action plans.

Suffering from cash flow issues, a rural hospital system faced the prospect of scaling back services if it could not find a way to increase efficiency and revenue. Allen’s company, Signature Performance, assessed the hospital’s RCM, leading to efficiencies that raised revenue by 10% and decreased accounts receivable days by 27. These improvements enabled the hospital to move forward on plans to add a wing and increase service levels.

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Technology can be a potent efficiency booster. But not all tools will be the right fit for your clinicians, patients, staff, or strategic vision. Some tools may add complexity or remove beneficial face-to-face interaction. Others could be useful, but only if they’re applied correctly.

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Ask

These are some key questions to ask before acquiring new technology:

• What need does this technology address?
• Does it simplify or add complexity to your workflows? (Check by diagramming the workflow, step by step, both with and without the technology.)  
• Are other providers using this technology? Have you talked to them?
• How much provider and staff training will the technology require? Do you have the time to provide this training, and do users have the time to take it?
• How do the up-front costs compare with the potential long-term savings?
• Before investing in artificial intelligence (AI), have you addressed all data integrity issues? (AI is useless if the data you’re feeding into it is inaccurate.)

Act

• Reassess your existing technology by asking users what’s working and what’s not and by tracking key performance indicators that measure what the technology is supposed to achieve.  
• When a technology’s performance is falling short, work with users and vendors to identify solutions. But don’t be so wedded to your investment in a technology that you’re afraid to ditch it.
• Integrate AI to reduce errors and burdens. For example, AI systems can track updates to medical coding systems, audit medical records to locate coding errors, document discrepancies, and flag these for human review. More recently, AI has been used to automatically listen to, capture, and process the patient-physician encounter, dramatically reducing the hours clinicians must spend on documentation.

As recently as 2020, the U.S. Department of Veterans Affairs (VA) used outdated technology that delayed processing and payment of claims for veterans and healthcare providers. VA worked with Signature Performance to implement a new software platform aimed at enhancing accuracy and speed. The technology-driven efficiencies improved claims accuracy to 99.9%, enabled 96% of payments to be made within 30 days, and freed up approximately 130,000 full-time-equivalent hours at VA to invest in other priorities.