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Revenue Cycle Management

Like other critical hospital functions, revenue cycle management (RCM) is undergoing an unprecedented shift. Changes are constant, driven by Accountable Care Act (ACA) reform and emerging reimbursement models. And in a complex healthcare economy, continuous process improvement in the flow of money from payers to providers has never been more important.

Applying the Simpler Business System for Breakthrough Change

Although traditional project-by-project methods of process improvement remain popular, the pace of today's external changes demand a much more radical and breakthrough level of improvements virtually every day. Classical improvement approaches have fallen behind and will not be able to catch up to the pace of needed changes. The Simpler Business System® (SBS) with embedded Toyota principles (also known as lean thinking) has been used to realize far-reaching and lasting improvements for revenue cycle processes in hospitals, clinics, and physician practices for more than a decade.

It's That Simple — and That Complex

The concept of Lean is a simple one: Eliminate non-value-added activities. Done right, Lean changes organizations, delivering real results that spur even more transformations. But when we're talking about RCM, there can literally be hundreds of staff tasks involved, along many different touchpoints, just to get a bill off to a patient or payer. That is decidedly NOT simple. The lean lens easily highlights the non-value-added activities, the process reveals opportunities, and the people involved are empowered to create improvements. And that leads to resuts that really stick.

A Better Result: RCM Leading to ROI

Consider this example: Through process flow analysis and prioritization, a mid-sized health system discovered that 2,700 medical records that were incomplete beyond 30 days. By engaging everyone in the Lean process improvement cycle — from the chief medical officer to the floor staff to IT management to the medical records team — the health system was able to improve net revenue cash flow by $5.8 million in less than 24 months.

Other improvements the system achieved, proving the gains are being sustained or further improved, include:

  • Coding cash flow improvement of $5 million
  • Billing cash flow improvement of $4.9 million
  • Operating expense improvement of reduced bad debt write-off of $2.3 million per month
  • Redeployment approaching 50 people

Radical change isn't easy, but it is possible. And when it begins, it creates a snowball effect that builds greater commitment — a strong and tangible commitment that will power your Lean journey — from everyone involved.

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