Optimizing Every Revenue Opportunity through the Value Cycle

Guest post by Mark Montgomery, CMO, Craneware.

Mark Montgomery
Mark Montgomery

Three major trends are driving change in healthcare, and all three will also drive IT demand. First is the movement toward managing population health in various forms. Taking on this financial and clinical risk will require processing and making decisions based on the demographic, clinical and financial data that have been filling warehouses everywhere.

Secondly there is the rise of consumerism. Individuals faced with rising out-of-pocket expenses are doing more self-directed research on their health and doing more comparison-shopping. Providers will continue to respond with medical malls, clinics aligned with retail pharmacies, telemedicine and other innovations to control costs and still deliver care.

Even though more Americans than ever are insured, high-deductible plans can affect providers’ debt and charity care. Patient-friendly point-of-service collections and finance plans will require IT investment, as will more efficient collections processes.

The third trend – the move by government and private payers toward value-based reimbursement – will continue to affect the industry in 2016 and beyond. Even though fee-for-service is still the dominant reimbursement model, the U.S. Department of Health & Human Service’s January 2015 announcement that Medicare would be “tying 50 percent of payments to these {value-based} models by the end of 2018” has seen providers taking a hard look at quality and cost of care.

While payment will increasingly be determined by quality of outcomes rather than quantity of services billed, quality and cost – the components of value – aren’t connected in a straight line. They are affected by every department in a provider system, and no system can manage what it can’t measure. If that data can be accurately collected and analyzed, it can inform decision makers not only on how successful they are at delivering quality care, but also whether the cost of delivery exceeds their reimbursement.

Where will this data be found? The revenue cycle will be a good place to start, by analyzing the enormous wealth of information contained in the chargemaster, where every charge associated with every outpatient procedure is stored.

Beyond containing the chargemaster, the revenue cycle is obviously critical to a provider’s ability to stay financially viable. In this new value-based world the relationship between revenue, quality and cost – always important in the past – will now be coordinated even more closely. They cannot be addressed as separate concerns but instead managed as components of a single larger process we call the value cycle.

Value cycle describes the full life cycle of optimizing every opportunity to achieve the best outcome for the best cost. It includes traditional revenue cycle components, such as pricing, charge capture, claims performance and compliance, but also addresses additional dimensions, such as:

Managing this process will require visibility into and understanding of cost, revenue and quality data across the value cycle. Without this, a provider system will risk their patients’ satisfaction, their own profitability, and their regulatory compliance. Once risks are discovered, a value cycle approach will mean converting those risks into opportunities for improvement in cost, revenue and quality. Finally, the value cycle will require optimizing these improvements, turning them into sustainable processes.

Discover, convert and optimize. The value cycle will connect cost, reimbursement and outcomes, helping providers meet their mission and margin in a world linking reimbursement to value.

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