For hospitals and health systems, replacing or upgrading an electronic health record (EHR) is a major undertaking fraught with operational and financial risk. Not only must the hospital ensure the smooth transition of clinical information, they also need to be sure accurate coding, demographics, and financial data will be available to sustain billing operations.
Supporting a seamless revenue cycle conversion requires extensive planning and training, along with laser-like focus on the operations and features of the new platform. Too often, however, billing personnel are pulled in multiple directions as they scramble to master the complexities of the new system while trying to wind down aging accounts receivable (AR) linked to the legacy platform.
Attempting to juggle these competing tasks can produce the worst of both worlds: outgoing claims submitted through the new system stall, while unresolved accounts in the old platform pile up. Cash flow erodes as days in AR and denials increase. And if unanticipated problems or delays emerge during the EHR implementation, the financial problems can quickly snowball.
To mitigate these risks and preserve cash flow, conversion planners should consider a bifurcated approach to the revenue cycle transition. By tasking internal staff solely with handling new system billing activities, in-house personnel can more quickly develop the skills and knowledge necessary to submit claims in an accurate and timely manner.
Legacy accounts, meanwhile, can be outsourced to a qualified, third-party AR resolution vendor. Turning the old inventory over to external specialists not only allows internal staff to concentrate on current claims and the new system, it also ensures that aging denials will be worked methodically to resolution. That means cash can be collected on accounts that otherwise likely would have been written off.
GROWING EHR COMPLEXITY
Nationwide, the volume of EHR implementations and upgrades continues to accelerate as hospitals transition to second and third-generation clinical and financial information platforms. According to a recent study, the EHR market is expected to expand from $29.7 billion in 2016 to $39.7 billion in 2022.
The growth reflects demand for sophisticated systems that can accommodate the robust data requirements of value-based care, provide better interoperability between health systems, hospitals and clinicians, and support a growing array of digital patient engagement solutions.
Given these expanding requirements, it’s no surprise EHR complexity has increased exponentially in recent years. Systems are incorporating a growing number of clinical and operational fields and data streams, including foundational revenue cycle information like plan codes and payer contract terms.
IMPLEMENTATIONS CAN LEAD TO LOWER OPERATING INCOME
While these features translate into unprecedented functionality, today’s systems require more training and oversight to ensure successful deployment and operation. Under the best of circumstances, it’s not unusual for hospitals undergoing EHR conversions to experience an increase in both days in AR and denials, along with a commensurate reduction in cash flow. In fact, AR spikes associated with EHR conversions frequently can take a year or more to stabilize.
And that’s assuming a relatively smooth implementation. Should problems arise, the financial impact can be significant. One health system in Texas, for example, recently cited a trouble-plagued EHR implementation as the primary reason behind widening financial losses and a bond downgrade. Ector Medical Center Hospital, a 402-bed regional medical center in Odessa, Texas, reported operating losses of $59 million in 2016 and $77 million in 2017, red ink the hospital said stemmed in large part from a problematic EHR conversion and resulting difficulties with AR accounting and management.
“Given the enormous investments hospitals make in EHRs and the essential role the technology plays in both patient care and reimbursement, it is critical that every step be taken to ensure a successful implementation. Partnering with a qualified third party to resolve legacy AR enables internal staff to focus exclusively on the new billing platform. For Northwestern, this best practice has generated major benefits, both in terms of more effective conversions and improved collection of old AR.” – John Orsini, senior vice president and chief financial officer, Northwestern Memorial Healthcare
In Tennessee, Vanderbilt University Medical Center said an EHR implementation “put pressure on clinical volumes in the post-live period” that contributed to a $66 million reduction in operating income in fiscal 2018.
In 2015, more than $100 million in EHR-related expenditures and two years of continuing financial problems tied to the EHR project led the former University of Arizona Health Network – now part of Banner Health – to replace its new EHR with a competing EHR platform.
SEGREGATING AR MANAGEMENT
How an EHR implementation unfolds depends on a wide range of factors, including the level of training and support provided by the system vendor. That said, it is safe to assume the odds for success are greatly improved if the in-house billing staff is not required to simultaneously work legacy denials while attempting to submit clean claims through the new system.
Beyond the extra workload and inconvenience that juggling the two tasks entails, allowing personnel to continue to interact with the legacy platform can undermine acceptance of, and confidence in, the new billing process. This, in turn, can reinforce outmoded processes or behaviors and hinder the development of staff-wide competence with the new system. The net result is further financial risk.
Assigning the legacy denials and unpaid claims to a qualified AR resolution provider like Healthcare Financial Resources (HFRI) resolves these potential barriers to EHR success while helping ensure the hospital collects every dollar it’s entitled to.
THE HFRI PROCESS
While operating losses associated with EHR transitions are usually short-term, it is still important to support billing staff by ensuring your legacy AR is segregated and handled separately. HFRI is experienced in helping hospitals and health systems through a variety of EHR integration scenarios, including new systems, system upgrades and the transition of newly acquired facilities. We frequently encounter situations where conversions lead to cash reductions and working with us can help mitigate these drops.
With all clients, HFRI uses a proprietary AR recovery process that relies on a combination of robotic process automation (RPA), intelligent automation and staff specialization. HFRI’s unique capabilities typically enable a 25 percent improvement in resolution cycle time for legacy claims of all sizes, with a cash recovery rate that is generally double that of competitors.
Most AR conversions should begin well before the go-live date and unfold in stages to help ensure internal staff can focus on training with the new system. HFRI recommends the following steps:
- 6-9 months prior to conversion: Develop your sunset plan
- 4 months prior: Outsource AR collections for claims that are 120 days or more from the bill date
- 3 months prior: Outsource AR collections for claims that are 90 days or more from the bill date
- 2 months prior: Outsource AR collections for claims that are 60 days or more than the bill date
- 1 month prior: Outsource AR collections that are 30 days or more from the bill date
- At conversion: Continue to outsource AR collections for claims that are 30 days or more from the bill date
A progressive approach allows the outsourced vendor to focus on AR recovery and resolution and avoid an AR backlog, while minimizing hospital costs by deferring outsourcing for claims less than 30 days old.
REDUCING CONVERSION RISK
Avoiding problems associated with EHR implementations requires not only careful planning but also clear communications with vendors and staff. The inherent risks associated with an implementation or conversion can be greatly reduced by isolating legacy AR and tasking external resources to resolve these claims. This helps ensure not only a cleaner implementation, but less chance for cash flow interruptions resulting from delays in the collection of both current and legacy claims.