October 3, 2011

Constant Change Requires Dual Focus of Chief Financial Officers

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If there is one constant in today’s healthcare environment, it would have to be that there is continuous change. ICD-10, ARRA, Accountable Care Organizations (ACOs), never events and the need for improved patient care and clinical integration (to name a few areas) confirm that the healthcare marketplace undoubtedly is going through an extraordinary period of transition.

The expertise these changes demand doesn’t just involve putting into motion and automating the vital elements of patient care and business operations – as it also means fundamentally transforming how a hospital’s clinical and financial operations work.

Coding and ICD-10 are a subset of issues driving the overall need for change in revenue management, a process involving legacy system receivables and upgrading the current HIS.

While many initially focus on the pressing need for changes in organizations’ core clinical systems, inevitably all come to an understanding that this effort also requires transformation in core financial revenue system. It’s critical to recognize the financial risks of such projects and what is at stake. These include not just the capital investment in design and implementation of a new core clinical system, but also the system’s operations and revenue generation functions. Charge-capture and billing issues need to be addressed from the start of the project, thus protecting the value of the investment.

The prospect of managing the financial risk associated with switching from a legacy revenue management system to a new system that incorporates all core clinical functions, financial roles included, at first may appear daunting. However, proper planning and active engagement by the executive team, including financial professionals and the chief financial officer, will help ensure success.

It’s particularly important for CFOs to participate fully in setting project priorities and overseeing the parallel development of financial subprojects that support the new systems’ implementation. Furthermore, CFOs need to maintain a two-pronged focus by ensuring that potential risks are mitigated while at the same time taking advantage of the new system to enhance revenue management processes.

It’s easy for charges to become lost in the transition process, or for double charges to exist or incorrect amounts to be charged. Such inaccuracies could have a significant negative impact on charge processing and ultimately the integrity and effectiveness of billing, payment and compliance. This ultimately also can result in other harmful consequences affecting “cash on hand” and an organization’s volume of A/R days.

Another important challenge is staffing, and more specifically what a new system represents to employees. Change presents the possibility for staff resistance as people move away from familiar systems. Furthermore, there are training and staffing requirements that potentially will produce a drop in efficiency. Moreover, an ongoing need will arise to shift FTEs from one department to another to meet the changing demands of providing care and new healthcare mandates.

To assist in overcoming the above cited challenges, again, active involvement of the CFO in all stages of the transition will help ensure that charge capture and billing issues are addressed from the beginning of the project. This is key to success and critical to protecting the value of the investment.

About the Author

John Evensen, MBA, is vice president of client development for FirstSource. He joined the team in early 2011 after serving with McKesson, Siemens and WebMD. John has served in various sales and sales management roles, with the majority of his career dedicated to the revenue cycle and interacting with senior hospital executives. John earned his MBA from Utah State University.

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Read 104 times Updated on September 23, 2013