Hayes' Healthcare Blog

Low hanging fruit. You likely hear the term nearly every day in the business world. It refers to something easy to reach and therefore should be “picked” first. It has also come to mean an area where you can concentrate your efforts to get the most results.

In healthcare finance, low hanging fruit is often used as a descriptor of the easiest money to collect on outstanding accounts receivable. Revenue Cycle teams focus on Medicare, Medicaid, and specific major payers that make up the majority of their revenue.

Working the payers that will yield 80 percent of your revenue – Medicare, Medicaid, and two or three of your major commercial plans - makes sense and should be the first line of attack when looking to collect outstanding revenue. But what about the “fruit” that is further back and higher up in the “trees?” What about that other 20 percent of your revenue?

You shouldn’t be content with disregarding 20 cents of every dollar. With improvements in automation and technology, it’s time to take another look at this still-very-valuable component of your receivables and begin mapping out a new attack plan to collect it.

As healthcare costs grow, reimbursement continues to decrease, and margins for providers get smaller, we see the room for error getting smaller as well.  To combat this there has been an increase in mergers and acquisitions (M&A)^[1].  As the number of mergers and acquisitions increases, one result is system conversion.  Instead of disparate systems, the newly formed organizations either move to one new system or they consolidate their systems to make their processes more efficient. As more organizations implement new revenue cycle systems, they are faced with many challenges but also many opportunities – one of which is the opportunity to implement a denial management system.

A strong denial management system will help you not only identify issues with your revenue cycle and help you avoid leaving money on the table, but it will also give you the information you need to optimize it.  Below is a quick summary on how to set up a denial management system.

Demands continue to hammer healthcare organizations in today’s ever-changing environment:

• Increase patient engagement.
• Reduce costs.
• Meet new requirements of value-based care.
• Comply with the Affordable Care Act (or the American Health Care Act or whatever new plan emerges from the ongoing congressional battle over healthcare.)

Organizations scrambling to meet these demands have become increasingly reliant on their IT systems. Practice management (PM) systems form the foundation of an organization’s business and many are coming to realize that the systems they have in place can’t get the job done. A number of older systems are slow, difficult to use and can’t keep up with the demands of a modern revenue cycle. The need for automation, data analysis and detailed reporting often requires the implementation of a new PM system.

While this may solve the needs of the future, it creates a ton of problems in the present. IT system transitions, though often necessary, are complex and affect nearly every aspect of an organization. One of the most critical aspects of a PM system transition involves the handling of accounts receivable (A/R).

Here are several key questions to ask as you prepare to wind down your A/R during a transition.