Financial Business Health Check – Is There Any Money Being Left on the Table?

Published in Member Communities on December 03, 2024

Financial Business Health Check By Ronda Buhrmester, Senior Director, Payer Relations, VGM & Associates, and Kim Cuce’, Director, Business Optimization, VGM & Associates

Money is being left on the table with missed revenue opportunities, inefficient intake and billing practices, and uncollected patient payments. Would you agree with that statement? We need to uncover the root cause of failure to reveal the root cause of success. Let’s start the discussion by identifying and addressing financial inefficiencies that will lead to evidence of adding the money to the bottom line.

Financial Inefficiencies

Common areas of revenue loss are billing errors, denied claims, and patient collections. The billing errors can be from incorrect coding or missing documentation. With denials, reviewing the reasons for denied claims is crucial. Patient collections can be a challenge due to the high deductibles with health plans and unpaid patient balances.

Suppliers need to strategically begin educating patients on their financial responsibility.

How does this impact revenue? It’s increased patient financial responsibility and delayed (missing) payments. Suppliers need to strategically begin educating patients on their financial responsibility just as all other healthcare entities currently do. In addition, setting a company policy for patient payment plans will be valuable to the patients, staff, and the company.

Revenue cycle management is defined as receiving a referral (order) that gets processed during intake, delivery (setup), through confirming the order so the claim gets submitted for payment. When was the last time your intake to billing process was reviewed? Are there areas of improvement such as fewer touches for the order? Maybe it’s time to educate or re-train staff on the top five-to-ten payer policies. If there is a specific area that is an issue, such as the denial rate, held A/R, or DSO, then consider implementing a robust process for improvement those specific indicators.

Look for areas that can be automated and use staff for other necessary areas in the business.

Integration of AI and Technology

Another popular area to consider is technology and automation. What are the benefits? We commonly say you don’t know what you don’t know. This can mean a lot of things. First, let’s consider reaching out to the billing software company inquiring about areas of need, such as electronic eligibility and sending out e-statements for example. Look for areas that can be automated to avoid human touches that can lead to human errors, and instead, use staff for other necessary areas in the business. Outsourcing is not all bad. Considering an a la carte or specific areas of need can be a good start when considering outsourcing any areas of the revenue cycle management. Lastly, let’s consider software integration. It’s here whether we are a fan of it or not. Using AI or similar platforms to review documentation and to contact insurance companies is happening as we speak, in all aspects of healthcare, not just in DME. Keep an open mind to it and check it out.

The action plan is to conduct a financial business audit considering the previous recommendations on a quarterly basis. There is never enough training with staff on policies, payers, and company policies. The training and staff education need to be an ongoing best practice while looking to technology for assistance. Finally, adjust revenue cycle strategies as necessary. Nothing should be set in stone.

Discovering Cost Savings Through Revenue

Where is the evidence in all the recommendations discussed? With the Revenue Cycle Strategies (RCS) service by VGM, we have case studies and time studies showing missed revenue opportunities, cost savings opportunities, and maximizing collections.

Case Studies

We started out following an order to see how many times it was touched all the way through confirmation. Ten times one order was touched before it got confirmed for claim submission! The process has since been narrowed down to four touches, from the time the order is received to the time it’s confirmed. Talk about time savings, staff relief, fewer mistakes, happier patients and referrals, and importantly, the intake to billing process is more efficient.

We discovered that a supplier we worked with on a business health check recently was not billing for oxygen gas contents (E0443), maintenance, and serving the oxygen equipment. We ran the reports and discovered with just Medicare beneficiaries, there was $1.5 million in missed revenue over 24 months. We worked with the staff to understand the challenges and set up the process to capture this missing revenue.

$1.5 million in missed revenue over 24 months

We discovered there were cost savings in automations by using technology. We set up the process to implement electronic eligibility that was costing the company about $14K monthly to manually check eligibility on 10,000 patients. Implementing electronic eligibility costs only $2,300 monthly, a savings of almost $12K monthly.

At this same company, we went from snail mailing statements to patients to phasing in e-delivery. We started with getting 30% of the patients to receive e-delivery statements that saved $12K annually. When the company gets 50% of the patients on e-delivery, the yearly savings will skyrocket to $21K. Most patients want a statement through e-delivery instead of snail mail.

60% of patients walk out the door without paying anything

Did you know 60% of patients walk out the door without paying anything? You know why? It’s because we do not ask them for payment upfront. Let’s start asking for payment upfront and really limit the volume of statements monthly. Other healthcare entities ask for payment upfront, why don’t we? Other healthcare entities do e-delivery statements, why don’t we?

When was the last time contracts with any outsourcing company were reviewed? This is the time to dive deep into reviewing the contract, making sure the terms are being met, and negotiating. They will do it if we ask.

If the supplier follows the plan, they will see $6.5 million to their bottom line annually.

The final case study to share is with a company we set a goal of getting their net collection rate to 80% and work on minimizing controllable write-offs, such as timely filing. If the supplier follows the plan, they will see $6.5 million to their bottom line annually.

If we were to add up all the mentioned revenue opportunities and cost savings, there is an estimated $8.3 million annually that would be added to the bottom line.

There are many other missed opportunities, such as offering products on a non-assigned basis for those suppliers who are non-participating. Considering a drop shipping program for resupply products, and finally welcoming virtual setups for some product categories such as CPAP setups. These are just a few more examples, and there are many more.

The goal is to implement a strategy to identify cost reduction opportunities, uncover untapped revenue streams, and attain operational excellence by investigating and addressing root causes. The best practice is to start with a financial business health check to discover the most concerning pain points. Your business doesn’t get better by chance, it gets better with change.

To learn more about business health checks through Revenue Cycle Strategies, click here or email us at RCS@vgm.com.

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This article was originally featured in the VGM Playbook: Mastering Business Management and Optimization. To read the full article and more like this, download your copy of the playbook today!