Becker's ASC Review

19 Executive Briefing: Revenue Cycle Management T he performance of revenue cycle management can make or break a surgery center. Administrators who answer the hard questions: what, why, and how, drive revenue cycle success. Focusing on key metrics, understanding the factors that drive the metrics, and implementing change are integral parts in an overall plan to maintain and improve profitability. Key Metrics – Focusing on the What Three of the most important metrics impacting an ASC's rev- enue health are: • Point of service cash collections: Collecting patient balances at the point of service improves cash flow and immediately reduces potential A/R. It can be argued that this is not a true part of the revenue cycle. However, the Healthcare Financial Management Association (HFMA) defines revenue cycle as "All administrative and clinical functions that contribute to the capture, management, and collection of patient and payor revenue." Revenue cycle is not simply transmitting claims to payors. The process begins long before there is a claim to be submitted and the key to upward trending net revenue lies in understanding the cycle before a patient ever enters the door. "If you start at the beginning with the end result in mind you put yourself in a position to succeed," says Jho Outlaw, SourceMed's VP of Revenue Cycle Services. • Net revenue: Net revenue is the overall cash collected as a percent of expectant cash. When ASC owners and operators don't know their net reimbursement at the case level, they don't know if they are collecting all the revenue they have earned. "A common way to judge collections and ASC health is whether net revenue is more than last month or last year," says Outlaw. "It is a measure used when there isn't access to systematic auditing tools and meaningful analytics. Manually reviewing net revenue metrics doesn't give you proper insight into the reasoning behind the changes. A solid understanding of net revenue will help you to determine if you are leaving money on the table." • Aging accounts receivable: Once A/R becomes 90 days or older, it is deemed as aging A/R. Large percentages of expect- ed cash residing in this aging bucket is a clear indication that there are areas of opportunity. Workflow automation can have a major effect on aging A/R and lead to faster realization of revenue while reducing potential write-offs. If managed properly, these metrics provide insight into answer- ing the harder questions: Why are collections down? Are we getting paid everything we are owed? What adjustments need to be made to address current gaps? An administrator armed with these insights has the transparency necessary to enhance financial performance and hold staff and payors accountable. In other words, visibility can lead to the revenue health of a facility. Insights – Understanding the Why Unfortunately, transparency and visibility are not readily avail- able to many ASCs. In fact, the only visibility for some administra- tors comes after they have sifted through piles of paper reports and manually created spreadsheets. "The data is there, but it's not in a readily available format to answer the questions at hand. For example, why is my net revenue down this month?" points out Terry Rajendran, SVP of SourceMed Analytics. "Having con- sumable data at their fingertips gives administrators the ability to answer the hard questions. Not what is my claim submission speed or net revenue, but instead why is my claim submission speed 'X' or my net revenue 'Y.' When you start answering the why you begin to understand how to increase profitability in your center." Rajendran knows first-hand the pain behind mining data be- cause she used to be an administrator at a busy surgery cen- ter. "Pulling reports was frustrating and time consuming," says Using Analytics to Answer the Hard Questions in Revenue Cycle Management Sponsored by "Manually reviewing net revenue metrics doesn't give you proper insight into the reasoning behind the changes. A solid understanding of net revenue will help you determine if you are leaving money on the table." — Jho Outlaw, SourceMed's VP of Revenue Cycle Services

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