Opportunities and Obstacles: A CFO Conversation on Health System Financial Resiliency

Key Takeaways:

  • Health systems need to move beyond cost cutting strategies to weather the current financial climate, they need new strategies for generating revenue, including relying on automation to scale scarce clinical resources. BJC Healthcare focuses on people, process, and technology: where can they automate where previously they relied on people to do the work manually
  • Whereas previously labor was the primary driver of economic growth in healthcare, there is real opportunity for leveraging technology to capture additional opportunity. Mueller cautions healthcare orgs to ensure they have processes in place to support new technology implemented; and Damschroder pushes the importance of standardizing work and embedding new tools into the workflow.
  • The onslaught of AI powered technologies on the market makes evaluating and selecting a tool for investment confusing. Both HFH and BJC leverage Project Management Teams to ensure they get returns on their investments

Iodine Intelligence tackles a new challenge in healthcare’s mid-revenue cycle every month, shedding light on problems and solutions and sharing valuable insights from industry experts. Listen to Episode 13 Opportunities and Obstacles: a CFO Conversation on Health System Financial Resiliency to learn more.

Financial headwinds and staffing shortages from 2022 have prevailed, carrying over into 2023, forcing healthcare leaders to re-envision their workforce, redesign processes, and rethink strategies for achieving financial stability.

This month’s episode of Iodine Intelligence brings you a conversation we had in March, Iodine’s Chief Revenue Officer Troy Wasilefsky was joined by Henry Ford Health’s Executive VP and Chief Financial and Business Development Officer Robin Damschroder and BJC Healthcare’s VP of Revenue Management Harold Mueller to discuss the challenges healthcare systems are currently facing and strategies for building financial resiliency in the face of economic uncertainty.

Leveraging Technology to Capture Opportunity

The financial challenges facing healthcare providers today has led to an uptick in the use of consultants, particularly in the revenue cycle space, to try and stabilize health system economics. Overwhelmingly, the recommendation from these consultancies is cost reduction. CFOs are looking to slash budgets, with 75% stating they were planning on decreasing operating budgets as a cost savings measure.1

However, cutting costs doesn’t generate revenue. McKinsey has mapped out impacts to profit pools if no new sources of revenue are introduced. While passing on higher costs to payors and patients lessens the impact, profit pools are eroded in all three scenarios. Hospitals and health systems need a new source of revenue, or at the very least to be effectively capturing the revenue they’ve already earned.   

This report from McKinsey is pushing the idea that cost reduction alone cannot be the answer here. We need to find a way to also generate growth and new revenue, either new revenue, or at least be capturing revenue appropriately for the work that we’re already doing.”

Troy Wasilefsky, Chief Revenue Officer at Iodine Software

When asked how he approaches balancing efforts to manage costs with growth strategies, Mueller responded, “I think from the standpoint of things that we can’t control. So, if you think about the last 24 months, the price of some of the travel nurses…you wouldn’t have believed them five years ago, if you were to look at the balance sheet. That being said, from a revenue cycle standpoint, we are focused on the people, process, and technology. So, how do we automate things that can be automated, that are manual?” Currently BJC has a number of projects in flight looking to automate tasks which are currently done manually, and hopefully, these projects will enable BJC to ultimately redeploy staff to other areas.

Damschroder echoed these thoughts on implementing automation; noting that as the cost to procure a patient has gone up and staffing shortages persist, opening the “digital front door” is more important than ever. “Patients want to be seen faster than we can often get them through our process,” says Damschroder, “So the health system that can get that gate open in a market faster, and turns the faucet on, I think, wins there.”

Prior to the COVID-19 pandemic, Henry Ford Health decreased their revenue cycle costs while improving their yield by tipping their revenue cycle on its side and inserting automation to cluster homogeneous work (ex. grouping denials by demographics, regardless of payor), enabling staff to complete work faster and more efficiently. Henry Ford Health implemented Iodine with the same idea: increasing the productivity of the staff they currently do have. Damschroder noted that they have a lot of openings in the revenue cycle, and they’re holding out on those openings in the hopes that Iodine’s product will enable them to cover their current workload without the need for additional hires. 

Healthcare Providers Need a New Driver of Economic Growth

These strategies of implementing automation to reduce workloads, improve processes and scale staffing aligns with McKinsey studies. Historically, labor has been a heavy driver of performance and growth in the healthcare industry, dramatically so when compared to other sectors of the US economy.

Research from the Bureau of Labor Statistics shows that 90% of the economic growth in the healthcare space comes from labor, with more than two-thirds of labor’s contribution coming from workforce expansion (4M net jobs were added) whereas other sectors’ growth was primarily driven by capital or innovation.2 However, McKinsey would argue that there is a $1T opportunity in healthcare stemming from accelerating and scaling innovation in four key areas: care delivery transformation, administrative simplification, clinical productivity, and technology enablement.3 

However, it’s not enough for healthcare providers to merely find and acquire the right technologies, they must also be mindful of how they’re implementing them. As Wasilefsky explained, “Innovation, technologies powered by AI and machine learning…they can bring a tremendous amount of opportunity to organizations, and yet, if you don’t use them, or build your processes around using them, and manage that change management, you’re not necessarily going to get all the results.”

Mueller was quick to point out that ensuring processes are in place to support the actual technology implementation is key. As an example, before 2019 the mid-revenue cycle at BJC was decentralized, many departments including CDI, HIM operations, and coding were not part of a shared service, and different hospitals deployed technology in different ways. BJC centralized services right after the start of the COVID-19 pandemic, and this enabled them to deploy Iodine, which BJC used as an opportunity to educate staff consistently, query physicians in a consistent manner, and gave them a tremendous lift in query volume. BJC facilities that deployed Iodine saw a 15%-20% lift in query rates, with physician response and agree rates staying the same. Although CDI specialists were reviewing the same volume of charts, Iodine’s prioritization ensured they reviewed the right charts at the right time, resulting in improved query volume.

“You want to make sure that your technology supports your actual administrative processes, and the processes that you have in place… From an Iodine standpoint, when we had facilities that we had centralized (and we centralized them in waves) we saw a 15%-20% increase in query rates, with physician response rates staying the same and agree rates staying the same. And these folks were reviewing the same volume of charts, but they were actually in the in the right charts, “

-Harold Mueller, VP of Revenue at BJC Healthcare

Damschroder touched on change management; while some may interpret “standardization” to mean “you don’t trust me to do my work,” she was quick to push back that standardization is not about lack of trust, but rather about elevating staff to their top of license and focusing them on where they can make the biggest impact. 

Damschroder also talked about the importance of ensuring new tools are embedded in the workflow and that the new workflow has buy-in. Henry Ford’s Health trick is robust monitoring and transparency: ensuring everyone can see how everybody is performing. “When you can barely find the other workflow or the workaround somewhere else, it’s been fully adopted.” said Damschroder, “And when new people come into the organization, they don’t even recognize that there was an old workflow out there.”

Realizing the Promise of AI

While there may be a lot of promise surrounding AI powered technology, and the majority of healthcare executives recognize they need it if they hope to weather the current financial challenges, there remains some skepticism, largely stemming from lack of literacy surrounding artificial intelligence.

In fact, 60% of healthcare leaders report being confused by the range of automation and AI solutions.4 In the words of Wasilefsky, “AI is the new shiny bauble, and everybody uses that term, probably to an exhaustive level.” The confusion surrounding AI can make selecting an AI powered tool, and ensuring that investment will have a financial return, challenging. 

These feelings were reflected in the webinar attendees. In an Iodine survey of those attending the webinar, only 19% felt very confident in their ability to effectively evaluate and select the best AI tech needed to improve their financial performance, and only 28% of respondents felt they were getting quantifiable ROI from their current mid-revenue cycle solution. In fact, 80% of respondents felt they are missing out on earned revenue in the mid-rev cycle.

“This is something we hear in the market a lot. There’s an inherent skepticism of: have we seen the ROI prove out on some of these AI applications?” 

– Troy Wasilefsky, Chief Revenue Office at Iodine Software

The confusion surrounding AI is exacerbated by the glut of AI-powered solutions on the market. Between buzzword inflation, AI’s nebulous definition, and the vast range in AI technologies, their capabilities, and results, it can be difficult for healthcare leaders to truly wrap their arms around: what am I buying, what is it doing, and what outcomes can I truly expect? 

“As a representative of the vendor community I think a lot of this falls on us to not obfuscate the terminology of AI, and what AI is being utilized.” said Wasilefsky, “But instead, be far more transparent about what these technologies are, and how they work, and how they’re different from others, and also the impact piece.”

Mueller touched on the onslaught of AI-powered tech in the market, saying “Every vendor that we deal with that has a computer is “AI” now.” When it comes to evaluating AI powered solutions and measuring their impact, BJC has implemented Project Management teams, including some specifically in the revenue cycle space with revenue management experience, who evaluate business cases for new technology investments, and post implementation do a look-back to ensure they are seeing a return on their investment.

Damschroder echoed this, discussing HFH’s rigorous due diligence process regarding implementing new solutions. Regarding ensuring you see return on your investment, Damschroder emphasized the importance of ensuring adoption and that the new tool is embedded in the workflow. Whenever Henry Ford Health evaluates a new solution, they pay particular attention to: what is the lift to get this embedded in the workflow. For healthcare leaders out there who believe they’re not seeing the promised return on a technology investment, Damschroder’s advice was look at the workflow and ensure it’s embedded in the process, and then look at your adoption rates, because staff may not be using the tool or may only be using parts of it.

  1. Academy IQ, CFO Forum Debrief, December 2022
  2. The Productivity Imperative for Healthcare Delivering in the United States. McKinsey & Company. February, 2019.
  3. Claiming the $1 Trillion Prize in US Health Care. McKinsey & Company, September, 2013.
  4. The Academy Research and Analysis

Interested in Being on the Show?

Iodine Software’s mission has been to change healthcare by applying our deep experience in healthcare along with the latest technologies like machine learning to improve patient care. The Iodine Intelligence podcast is always looking for leaders in the healthcare technology space to further the conversation in how technology and clinicians can work together to empower intelligent care. if that sounds like you, we want to hear from you!

Moving Beyond the Standard Markers for Success

Join Fran Jurcak, Iodine’s Chief Clinical Strategist, and Nita Bruce, Senior Product Support Specialist, in partnership with ACDIS as they discuss how CDI teams can better measure productivity and program success beyond historically utilized CDI metrics.

Webinar Recording: Retrospective Reviews: The Last Line of Defense?

Each stage of the CDI documentation integrity process represents an opportunity for additional leakage of accurate and appropriate documentation, resulting in inaccurate coding of conditions being monitored and treated during the patient’s encounter. This results in inappropriate reimbursement for care provided as well as potentially imperfect quality reporting. And despite massive investments in documentation and coding solutions, earned revenue loss continues to persist — Medicare and Medicaid underpayments reached $75.8 billion in 2019*

Retrospective reviews are the last opportunity to resolve documentation and coding issues for billing and quality reporting purposes. Traditional reconciliation is inefficient and often ineffective for a number of reasons, including: inefficient process, understaffed CDI teams and lack of technology that supports accurate identification of opportunity. 

Listen to this webinar as Fran Jurcak, Iodine Software, and Dee Banet, Advent Health, discuss strategies for implementing a more robust retrospective review process, including: 

  • Why current approaches for retrospective reviews aren’t working 
  • Strategies for prioritizing what to review 
  • Solutions for automating the Retrospective review process 

*AHA Fact Sheet: Underpayment by Medicare and Medicaid January 2021 

Webinar Recording: The Documentation Improvement Process: Where and Why Leakage Happens

Each stage of the CDI documentation integrity process represents an opportunity for additional leakage of accurate and appropriate documentation, resulting in inaccurate coding of conditions being monitored and treated during the patient’s encounter. And despite massive investments in documentation and coding solutions, earned revenue loss continues to persist — to the tune of $5-11M in leakage for an average 250-bed hospital1.

Leakage occurs due to a combination of factors including both human issues and technological misalignment, and occurs even in the most mature and highest performing health systems in the country.  Minimizing this leakage is key to the success of any CDI program and top of mind for CDI and coding leaders.

View this on demand webcast in partnership with ACDIS featuring health system leaders from Iodine Software and The University of Kansas Health System for a discussion on:

  • The four distinct phases where leakage occurs (from finding the case, to getting it coded)
  • The challenges to managing a more accurate mid-cycle
  • Tactical steps and solutions to address leakage

Download recording.

12016 ACDIS Advisory Board Study

Webinar Recording: Reducing Payer Denials with Clinical Documentation in the Mid-Cycle

Determining the right fiscal initiatives are at the forefront of every healthcare finance leader’s mind due to COVID-19 and its impact on margins – from furloughs, to reducing capital expenditure and focusing on debt collection. But margins were thin even before COVID-19 due to leakage in the mid-revenue cycle, with a 250-bed hospital losing up to $11M annually (2016 Advisory Board Study). Now with payer denials up 25% due to the CARES Act (XIFIN claim data), hospital finance leaders need to think beyond short-gain fiscal initiatives to recover lost revenue.

View this on demand webcast in partnership with RevCycleIntelligence featuring health system leaders from Iodine Software and Integris Health for a discussion on:

  • Why mid-revenue cycle management is a key concern today
  • Strategies for reducing payer denials with clinical documentation
  • New technologies that focus on the mid-revenue cycle to fully capture earned reimbursement and drive quality

Download recording.

Webinar Recording: Moving Beyond Cost Containment in the Wake of COVID-19

Prior to COVID-19, many hospital finance leaders knew that a major reason for thin margins was leakage from mid-revenue cycle, specifically documentation integrity. Today, health systems face even more unknowns — from the unexpected 30% reimbursement decline due to COVID-19 medical admissions (according to an Iodine Software analysis) to the rise in telehealth vs. inpatient visits.  As health systems prepare for “the new normal,” finance leaders are looking for ways to ensure their system is ahead of the curve and built to ensure financial resiliency.

Be part of the discussion with other health system revenue cycle leaders that will cover:

  • The projected financial impact of COVID-19 and current financial recovery trends, based on a real-world analysis of 600+ U.S. hospitals
  • Mid-cycle leakage and the role clinical documentation plays in driving revenue
  • Revenue cycle strategies you can employ today that are short-term revenue accretive and build financial resiliency for the long term

Speakers: 

  • Kyle McElroy, VP, Health Information Management
  • Fran Jurcak, MSN, RN, CCDS, Chief Clinical Strategist, Iodine Software
  • Ravi Chopra, MD, Clinical and Product Specialist, Iodine Software

Download webinar recording