Becker's Hospital Review

10 CFO / FINANCE in areas in which it is critical to actually win more revenue for the hospitals they serve." Many other health systems — including Roanoke, Va.-based Carilion Clinic and Lewes, Del.-based Beebe Healthcare — are outsourcing revenue cycle operations. Ms. Perrotty is a firm believer that you don't need to own something for it to work well and offered some advice for leaders at other health systems who may be struggling to improve their margins amid ongoing financial and workforce challenges. "You don't need to own something for it to work well. Health systems need to get away from the 'we built it, we love it' or the 'this is the way we've always done it' mindsets," Ms. Perrotty said. "Push yourselves to think beyond the way you've always operated and figure out if there's a smarter way to do it. You've also got to own your market. ere should never be a person that goes anywhere else but to us to get the high-quality care that they need." Consolidation in banking versus healthcare While partnerships are part of Tower's strategic plan, Ms. Perrotty would not share whether any potential mergers or acquisitions are on the horizon. Hospital M&A is picking up steam across the country, particularly in Pennsylvania, but — pointing to the banking sector as an example — Ms. Perrotty maintains that bigger is not always better. "I spent 30 years in banking, an industry that went through dramatic consolidation and change. Healthcare is at a reasonably early stage of its consolidation and may need to rethink its model," she said. "I worry about small, rural hospitals and their ability to continue to serve their communities. I think healthcare will be smart and start to leverage new technology infrastructures." Many banking executives previously believed small, community banks would not survive, but the way that they did was by sharing infrastructure, according to Ms. Perrotty. "[Wells Fargo] shared infrastructure that allowed their banks to piggyback into bigger banks: they could have an ATM, debit cards and many other products and services, which was all done through technology," she said. "I think that will happen in healthcare. Having been through multiple mergers in the financial sector, I am not sold that bigger is always better. Big can make it really hard to differentiate. You've got to be really skilled to make the human capital piece work as well as the financial capital in large enterprises." While the challenges between the banking and healthcare sectors are different, investing in technology and infrastructure may be the key to survival for many smaller, community facilities that continue to face financial headwinds on multiple fronts. "Health systems should partner to gain infrastructures, become less obsessed about owning infrastructure platforms, and focus on partnering with leaders in this space. Can they roll out innovative technologies in a broader way rather than hanging their name on the product they built?" she said. "e mission of nonprofit healthcare is to provide the highest quality care to the communities we serve. And if we can't build it, we will find a way to partner with leading solutions providers and make sure the tech platform is available to our patients and employees." n Why 2 health systems don't need to build it to love it By Andrew Cass S ue Perrotty, CEO of West Reading, Pa.-based Tower Health, told Becker's that health systems need to move away from the "we built it, we love it" mindset. "You don't need to own something for it to work well," she said. In July, Tower transitioned its revenue cycle operations to Ensemble Health Partners. About 675 Tower employees moved to Ensemble in the process. Ms. Perrotty said that revenue cycle is "one of the hardest business models to try to figure out, and we're subject to a whole other industry, the insurance industry, and all of the shifts a consumer might go through throughout their lifetime." "We are never going to be the best in class at doing that because we want to invest in our clinical infrastructure," she said. "For revenue cycle, we wanted to partner with an organization where that's all they do, and Ensemble is the best in class at that." Ms. Perrotty said Ensemble is "aggressive with their payers, consistently investing in new technologies and scaling in areas in which it is critical to actually win more revenue for the hospitals they serve." Like Tower Health, Renton, Wash.-based Providence has outsourced some of its revenue cycle operations. In January, the health system completed the sale of its revenue cycle management company Acclara to R1 RCM. The closure of that sale in January also included a 10- year agreement for R1 to provide middle and back-end revenue cycle services for Providence. CFO Greg Hoffman told Becker's that a decade ago, the system "probably had a mindset where we needed to do everything ourselves." Now, they think, "maybe others can do it better in partnership." Mr. Hoffman said that over the past few years, they noticed that the underpayments and denials were going up over 50% in a two-year period of time, which led to the number of touches per claim going up over 50% over that same time period. They realized they didn't have the scale that a partner like R1 had. "R1's technology platform was years ahead of our own and it was an opportunity to catch up and lean into that technology." That mindset shift goes beyond revenue cycle. In April, Providence sold Labcorp some of its laboratory business assets that were operated by its California medical groups, including ambulatory lab draw stations and an ambulatory laboratory facility and other equipment. "They were just more efficient, more cost effective for us," he said. n

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