After a fairly predictable start, 2020’s unforeseen turn into a yearlong (and counting) pandemic created a torrent of financial and clinical challenges for hospitals and health systems. Reduced volume, increasing care complexities and an uncertain economy still remain in 2021 as hospitals continue working toward financial recovery. It won’t be easy; Moody’s Investor Services has predicted that public and nonprofit hospitals’ median absolute levels of operating cash flow will decline 10% to 15% this year. While the for-profit hospitals’ outlook is predicted to be stable for or in 2021, Moody clarifies that this “could change to negative if earnings decline or if there’s a marked decline in higher-paying commercial volume.”
With these driving factors, financial leaders must find ways of lowering costs and increasing profitability. This task may be untenable, though, as hospitals’ traditionally razor-thin operating margins were further decreased in 2020. New tools and technology to enable RCM improvements, therefore, have been out of the realm of possibility for most organizations. As hospitals remain in “do whatever it takes” mode, several revenue cycle management (RCM) strategies can help strengthen their financial outlook:
These three strategies – along with others such as focusing on value-based models – can each help hospitals achieve financial gains, but for one problem: hospital budgets haven’t recovered yet, and their leaders remain uncertain about when they will. With this situation, hospitals’ funding for solutions and technology to foster much-needed revenue cycle improvements is frequently limited or nil. Without the ability to invest in services and technology, how can hospitals achieve the financial gains that are essential in 2021? For organizations facing this situation, a full RCM partnership may be the answer.
Many savvy leaders are evaluating the RCM partnership model and finding it attractive in today’s environment. For hospitals and health systems that haven’t fully recovered from the pandemic, a model that puts the financial risk on the RCM partner’s shoulders can help them achieve results and recover ROI before any major capital outlay. In addition, this type of partnership can afford much broader and deeper improvements. You’ll not only reap benefits in areas like the business office and revenue integrity, but also across the entire revenue cycle. That’s because you’ll have a truly integrated, interconnected end-to-end workflow that enables far greater results than a point technology solution can deliver.
One final, especially important benefit of the RCM partnership: it can help hospitals go beyond financial recovery to financial resilience so they’re not only maintaining viability but thriving. This means hospitals can give patients exactly the experience they want, gain market share, increase their competitive advantage, and become more prepared for what’s next in an uncertain world.
Contact us for a review of your end-to-end revenue cycle so we can discuss which opportunities would yield the greatest benefit.
Nicole Shingler is Director, Revenue Cycle & Physician Advisory Services at R1.