Jake Morris is managing director of McKinnis Consulting Services of Chicago, IL.
Tell me about yourself and the company.
I started out as part of a healthcare family in healthcare finance and compliance. I think I was pre-destined. I started out an internship out of college and got involved in big rev cycle companies. I was fortunate to be staffed in early engagements on big transformation engagements, one locally here in Chicago where they were rolling out the Epic technology back when they used to do design, build, and validate.
I was very fortunate to see all the bells and whistles of rev cycle. What people are trying to accomplish, best practice, and getting involved in the nuts and bolts of how these next gen systems behave and how integrated they are in nature. I was able to take that learning, go client to client, and start to pinpoint where these challenge points are in conversion, but more importantly, what you could do in rev cycle with this next gen technology to eliminate costs, promote efficiencies, and make sure that the process and people independent of the technology were set up for that integrated nature to take the next step and to performance within rev cycle.
How has the Affordable Care Act impacted the revenue cycle?
It has really impacted the front end of the rev cycle. Pre-service centers, pre-registration, insurance verification, and identification of Medicaid populations have always been prevalent in a rev cycle. This just highlights the importance of those processes up front, which often gets neglected in rev cycle because it’s such a focus on the back end.
With segmentation, you’re having what used to be “true self-pay,” where historically you would get maybe 1 to 2 percent yield on a collection standpoint. That is now being blended into the “balance after,” which traditionally got 40 to 50 percent. Why that’s important is propensity to pay scoring. It’s becoming even harder to segment that population and balance after to understand what my collection efforts should be.
This has highlighted the importance of patient liability estimation functionality. It’s highlighted the importance of payment plans, processes, identification of. Then also because of the Affordable Care Act, a lot of the young demographic population are the ones going to the markets, getting these high-deductible plans. They’re used to using technology and Internet, so making sure that these online portals are set up for success and you can leverage that is of the utmost importance right now.
Are hospitals struggling to get that patient responsibility portion paid now that their chunk is bigger?
I think so. There’s leading indicators right now that there’s more process improvement up front. We have all the self-pay strategies on the back end with the dunning cycles and the outsourced vendors and those are important. But we’ve always struggled as an industry in rev cycle to get point-of-service cash collections lifted on the front end.
The Epics of the world now have this technology, the robustness, and the transparency to promote it. Now we just need to make sure with the information we have that we’re leveraging the technology to actually help with that segmentation and making sure that we’re leveraging all the functionalities in front of us to promote that type of behavior.
I’ve read interesting case studies showing that it’s not so much that patients are unable or unwilling to pay, but that providers have made it too difficult for them to do so. Do you agree?
I think that is the case. It’s always been the case, even in point-of-service cash strategies in the past independent of these next gen systems. It’s always a struggle. Part of the struggle was less to do with technology and more to do with the willingness and a culture of asking. Also, with the data we have, what are we doing to interpret it and have strategies in place for that appropriate segment based on the propensity to pay?
We can have in a vacuum finance in the back end and an analyst doing mining, but if you’re not getting end users up front bought into the process, if you don’t have the leaders up front bought into the process, and there’s not an accountable metric-driven process to promote this, then it’s never going to launch no matter what technology you have.
How hard is it for hospitals to walk that line between trying to collect from patients who aren’t paying their bills but who also fill out satisfaction surveys?
What I’m talking about right now isn’t even collections. On the front end of it, when you have the patient in front of you, like in pre-service, it’s not even a collection strategy. It’s more about helping to educate the patient on their balance, how their insurance works, and when this is going to happen. Then educating them on all the different strategies, policies, and processes that we have to help promote getting that payment.
I had mentioned payment plans and making it easy with all the different partners that exist out there that can help get the prepaid credit card or online payment portals. You’re making it easy for them so they understand what they owe.
Once you understand something and it doesn’t seem complex, you’re more prone to pay. In healthcare, unfortunately, sometimes statement design makes it really hard to understand what I owe. That creates a lack of confidence in that amount, and therefore, I’m less prone to pay it.
It’s engaging that individual to educate, to help create a comfort, to then allow for that patient to make the payment. I think most people have high integrity in what they owe.
Are insurance plans that people are buying via the online exchanges harder for consumers to understand or do they contain terms that are less favorable to providers than commercial insurance plans have typically been?
You see the ads from the bronze plans in California, Minnesota, and others that have up to a $5,000 deductible. Making sure the patient understands that. Also, the insurance cards don’t really look that much different. You could have Blue Cross Blue Shield or you could have a bronze plan and it might be hard for the registrar to interpret the difference between what those cards look like. How do I identify those? Because it matters in terms of what the patient liability is based on those plans that have high co-insurance and high deductibles.
What are hospitals doing to address plans with narrow networks?
From our experience, it’s a work in progress. The first step is understanding your population, having the data to create a strategy to attack, and making sure you have that segmentation.
What typically goes wrong when a big health system has financial stumbles after implementing Epic or Cerner and what has to be done to fix the problems?
The Epics and Cerners of the world are fantastic. The whole reason we’re doing business the way we’re doing is because of this type of next gen system. It is integrated and transparent.
People underestimate the work effort. There’s an assumption that because I went live this next gen, ROI is going to come. When in reality, what we often tell our clients is that the rev cycle is always going to be the revenue cycle. Environment dictates how I attack revenue and how I attack cash.
In a conversion environment, it’s much more a mitigation tactic than it is attacking it upside, but you have to have the vision for both. You have to respect the conversion and make sure that you’re taking the right approaches to hunker down and manage possible loss. A buzzword you hear in the industry is “optimization.” You’re always supposed to be optimizing your rev cycle. It’s cyclical. It’s an assembly line. You always have to be analyzing how am I doing in that process.
A conversion is no different. I have to be much more conservative in my approach. If I do that right, I could be on the path to gains in the future faster. I think people put too much emphasis on immediate ROI from a conversion. What they need to put more emphasis on is, what are the leading indicators for successful conversion that will allow me for continued investment for future growth opportunities?
Do CFOs think those big-ticket conversions are worth it in general?
If done right, yes. People see the absolute value in these technologies. The CFOs seeing that hold their rev cycle teams accountable equal to the system the process and the people. Are we integrated, in fact? Are we an integrated health system? Are we transparent? We have a system in place that’s promoting change — the clinical departments can be involved. Are we building a structure that will last to engage them in resolution so that way we don’t just have an uptick temporarily, but we have a model for sustained performance?
People that do that and treat conversion as a catalyst for culture enhancement — those are the people that are saying, this is great, this is fantastic. These are the same people that in their optimization plans or transformation are looking to get more out of their platform as opposed to go out to market and bring bolt-ons, which we should be trying to eliminate.
Are there any technologies coming in revenue cycle that will have health system impact?
There’s some cool payment plan processes and technologies that are coming to fruition. That is going to be critical in helping with the ACA impact. The online portals have come a long way. A lot of front-end technology is making some good strides. A lot of the host systems themselves are doing a great job hearing customer feedback and trying to build those within, so you have one-stop shopping and you get the most out of your host system. I think that’s a really cool development and that’s something that our firm’s backing up — making sure that you’re getting the most out of your capital spend. I think you can.
Now more than ever you can’t separate business and IT. You have to have equal component understanding of what my IT platform can be capable of. I also have to know what am I trying to achieve from a business process standpoint? I think historically to look at rev cycle support systems, even the bolt-on technologies, that model is true. Whether it was a charge capture bolt-on, whether it was a denial management bolt-on, so on and so forth, in order to build those bolt-on technologies, the author had to understand what they were trying to accomplish in outcomes, understand the complications of the process, and ensure the system was built to that.
What we’re seeing now is that same skill set is required. However, you need to be able to do that in the host system as much as you possibly can, because they’re capable of doing it. By doing that, you’ll promote greater efficiencies and better end-user acceptance to using those work flows.
Do you have any final thoughts?
This is an exciting time to be in healthcare. That’s why you’re seeing such an interest from existing healthcare companies and also companies wanting to get into healthcare.
What I would say to buyers out there and organizations that are looking to continue to improve their overall experience, especially in the rev cycle arena, is making sure that you’re building in the time to get the most out of your current spend. Not have additional costs to your solution, but to challenge your business owners and your IT owners to budget the time to get together to have a strategy that aligns to your organization’s budget, to the industry trends and vision, and to get together and partner to maximize what’s going.
Making that part of their everyday existence. Not just one time, but making it hardwired like an audit process. Always evaluating your accountability structures. Always evaluating the productivity and efficiencies that you’re supposed to be gaining. Always evaluating how I can take these efficiencies, reduce cost, or repurpose cost to always be on the cutting edge of what the industry is doing.
If everybody focuses on that, you’re going to get a lot out of this wave of the technological boom that you’re seeing for this next gen. I’m excited to be a part of it and I’m excited to see what the results are in the next few years.