Readers Write: Centralized or Decentralized Revenue Cycle After an Acquisition? Maybe There’s Another Option
Centralized or Decentralized Revenue Cycle After an Acquisition? Maybe There’s Another Option
By Jim Denny
Jim Denny is founder and CEO of Navicure of Duluth, GA.
According to a recent AMA survey, for the first time, there are as many hospital-owned providers as there are physician practice owners. As this acquisition trend continues to grow, health systems are evaluating the best way to coordinate and consolidate revenue cycle management (RCM) across the entire organization. Typically, to streamline patient billing, healthcare data analytics, and reporting, organizations take one of the following approaches:
- A centralized approach. All RCM processes are combined across all entities into a single revenue cycle with a central billing office.
- A decentralized approach. All billing remains separate across all entities.
The path chosen often varies depending on the organization and its structure.
However, in many cases, neither option may be the perfect approach. Instead, organizations may choose to employ a customized billing approach, leaving a majority of each acquisition’s processes, technologies, and best practices separate and in place, which are evaluated over a defined time frame.
A short-term, slower, methodical approach allows the health system and acquisition time to get to know more about each other and can be much less disruptive. A slower integration, perhaps a year or year-and-a-half, allows both to understand how the other works and to work as a team to come up with a plan as how to grow together.
During this period, it is important to establish a common electronic data interchange (EDI) solution so data and reports can be standardized and summarized across all organizations. Then, the health system can review standardized performance data to better understand each acquisition’s approach to RCM, working to identify each one’s uniqueness, strengths, and challenges. From there, they can determine the best way to proceed for the long term. A customized approach is considered a hybrid because it allows the health system to decide whether centralization or decentralization is the right option, and choose from the best of existing RCM approaches, or determine that it’s time to incorporate new ones.
Here are three reasons why a customized approach can make sense for your organization following an acquisition:
This hybrid approach provides time to assess the acquired practic.e
Customized RCM can give leadership the time needed to evaluate the success of a newly acquired practice, while enabling the practice to maintain productivity and conduct business as usual. Questions to ask can include the following:
- What’s working and what’s not?
- Does the practice need guidance to improve their efforts? This includes looking at the statistics – days in accounts receivable (A/R), denial rate, and success in patient collections.
- What IT systems and vendor relationships are yielding the best results across claims management, patient payments, and reporting?
A customized approach allows a health system to choose from best-in-class vendor partnerships.
It benefits both the practice and the health system by allowing practices to maintain their own systems without having to conform to a billing office’s mandate immediately, while enabling the health system time to evaluate a number of systems and vendors and then making a best practice recommendation that fits the health system’s strategic roadmap. This is the time to assess what’s involved in streamlining and integrating technology from a process, people, and data perspective, regardless of whether the organization ultimately chooses a centralized or decentralized strategy.
This method provides breathing room to evolve over time while establishing a strong foundation for future growth.
Using a hybrid model for the short term can offer an organization the opportunity to mesh with other groups in an optimal way. With this approach, health system leadership does not need to force physician practices within the system to conform to the organization’s existing processes immediately. Instead, practices are given flexibility at a critical time that can ultimately lead to a successful merger. Even more importantly, it allows for necessary breathing room for the health system so it can prepare to adapt to industry shifts – such as building a bridge to move from fee-for-service models to value-based care, or in defining the best ways to evaluate when and where to participate in taking on risk-based contracts.
Choosing a short-term hybrid approach yields the opportunity to create a transition plan based on thorough evaluation to help ensure the health system capitalizes on the right processes, technology, and vendor relationships. And while there’s no easy answer, ultimately, the decision to centralize or decentralize an organization’s revenue cycle can be made together with buy-in from each organization, which is the best way to ensure long-term success.