Abstract: Myth buster, David Kirshner dispels the myth that health systems don’t need a chief revenue officer (CRO), exploring why hiring the right CRO could be among the most critical decisions a health system can make.
A convergence of external and internal factors is proving a catalyst for change, prompting CFOs to re-engineer the roles within the revenue cycle from a production process into a growth-engine fuelled by a more consumer-friendly experience. The current environment represents an opportunity for CFOs and revenue cycle professionals to think about their responsibilities. Should progressive leaders hire CROs to transform the health system’s revenue cycle management and improve patient experience? If survival and growth are on the agenda, the answer is YES.
In the article, Kirshner discusses the merits of bringing a CRO to the executive table. We’re seeing a trend that many thought-leading health systems are hiring CROs because it helps make them ‘fit for the future.’ For these systems, having a CRO is a differentiator. Continue reading to find out why these tech-savvy, data-driven, seasoned, C-suite executives are becoming the CFO’s new wingman or wing-woman.
Is your health system’s revenue stream positioned for the future?
The revenue cycle is becoming too complicated for CFOs to oversee it without assistance. With billions of dollars in revenue at stake, the risk is considerable for the CFO who ignores the signs and symptoms in the existing revenue cycle management model. Loss of volume, patient turn over, a level of instability in the realization of the revenue stream – are all at stake. To ensure your health system is fit for the future, we need to dispel the myth that existing organizational approaches to the revenue cycle remain fit for purpose.
The consumer/patient is the first principle
The healthcare industry is being reshaped by the rise in consumerism, increasing patient financial liability, and competition from business model innovators who are expanding into traditional hospital and physician service areas. In the old world, when the revenue at stake from the consumer population was considerably lower, writing off unpaid account balances was standard practice. However, now, when patient obligations represent 25-30% of the revenue stream, there’s much more focus on increasing yield through better patient engagement. To manage in this new environment, Chief Financial Officers (CFOs) need the right talent and know-how to manage both the financial and service aspects of the patient relationship. This new breed of the executive may not be just a VP of Revenue Cycle on steroids.
CFOs need the right talent and know-how to manage both the financial and service aspects of the patient relationship.
Born in the belly of Silicon Valley
Chief revenue officers first emerged in the technology sector. Conceived in the belly of Silicon Valley, the role was designed to uncover new revenue opportunities linked to digital products and services. These game-changing roles encompass sales, marketing, and customer relationship management in a growth-oriented framework. In these digitally native organizations, CRO positions are occupied by seasoned C-Suite executives who are data-driven, tech-savvy, team builders. In organizations that are publicly traded, it is often the CRO who is on the company’s Wall Street update call. In the healthcare world, the responsibilities may be a little different, but the CRO needs to look and feel a lot like it does in private or commercial industry.
The new CRO will play a critical role to ensure the health system is set up for success. Driving this vision through to actualization requires a more analytical, interpersonal, critical thinking innovator who can identify and emphasize customer pain points while creating new services designed to exceed patient expectations. Today’s environment represents an opportunity for CFOs and their revenue cycle professionals to rethink their future responsibilities, and the impact their actions will have on the long-term viability of their organizations.
Improving “patient experience” is critical to future financial success
Patient experience ratings are a barometer for “patient loyalty,” which translates directly into lifetime value. The experiences patients have is the sum of all parts – from appointment scheduling to clinical service, through to satisfying their financial obligations. Health plans are increasingly using the patient experience to change the way they contract with providers. The real value of improving patient experience scores is to increase consumer loyalty. Patients keep or change providers based on how they feel about their experience. When patients have a bad experience and choose to go elsewhere, that money goes with them. At many health systems today it is hard to find an objective and universal understanding of patient satisfaction with the financial experience.
Existing health system ratings are reported publicly and there’s no reason to believe the financial experience won’t become part of the standard toolkit of assessing a health systems effectiveness in the eyes of its patients. When potential patients view poor ratings, they will likely seek alternative care options. Ratings are like word-of-mouth. It only takes one bad experience trying to pay a physician’s bill to reverse a top box score. Similarly, a disgruntled patient’s social media post has the power to set off an escalating public relations chain of events with the potential to damage a health system’s reputation.
The new CRO will play a critical role to ensure the health system is set up for success.
Whether it’s a health plan or a health system, increasingly the patient financial experience will show up as an important new metric. That’s why health system CROs are making investments in solutions that leverage data, analytics, and behavioral segmentation to improve the patient financial experience. For example, many of the health systems using VisitPay are seeing their measurable and visible patient experience metrics going in the right direction.
Is patient access your Achilles’ heel?
Externally, Becker’s confirms that revenue cycle executives are anxious about patient access. Health systems care deeply about this function because it represents the front door of the institution. This is why they are looking for more consumer-friendly ways of providing patient access. One of the CRO’s primary responsibilities is to make patient access a streamlined and loyalty-building experience.
However, streamlining patient access also raises questions about the way the healthcare system is working. Health systems are still transactional when it comes to how patients get access. As health system leaders think about the transformation from a fee-for-service environment to one that’s more value-based, patient access capability becomes more than a front door, it’s the navigation system for patient services. Ideally, this front door includes the traffic light to direct patients to the right site of care based on their health requirements.
If the trend toward risk-based payment and managed care denials accelerates, CFOs need to prepare the system to do something more agile than they’re used to. How can a health system change its people, processes, and technology so that value-based care can be managed sustainably? Once care is delivered, it needs to be recorded and shared. For example, will the health system be able to innovate getting patients access to different providers without actually incurring another bill?
The CRO needs to act as a bridge between patient access and patient A/R.
An immediate pain point experienced by many hospitals today comes with the use of estimates. Consumers are becoming more demanding in asking about price before accepting services. But health systems are struggling to provide adequate payment arrangements based on the estimates they are providing. Payment in full at the time of service is not a realistic expectation in most cases. And what happens if payment arrangements are made, but the estimate turns out to be inaccurate? These front end challenges are invariably causing back end revenue cycle pain. The CRO needs to act as a bridge between patient access and patient A/R.
The expanding role of the patient as the payer
A recent Becker study states that 80% of all Revenue Cycle VPs identify the growing number of patients covered by high deductible health plans as the most disruptive change in revenue cycle management. Let’s pause for a moment to consider the domino effect high deductible plans have on health systems and the patients they serve:
- As deductibles continue to creep upwards at a faster rate than workers’ wages, and the number of patients enrolled in high-deductible plans increases, a higher number of insured patients have reported difficulty paying medical bills.
- The management consulting firm McKinsey & Company estimates the rate of bad debt is increasing at well over 30% each year in some hospitals for insured patients. And, many health systems attribute a jump in bad debt expenses to patients’ increasingly unaffordable insurance deductibles.
- According to the Kaiser Family Foundation, 43% of insured patients say they delayed or skipped physician-recommended tests or treatment because of high associated costs.
- When patients delay necessary or preventive medical care, they may end up in hospitals’ emergency rooms for treatment. About 80% of emergency physicians say they are treating insured patients who have sacrificed or delayed medical care due to unaffordable out-of-pocket costs, co-insurance or high deductibles, according to a poll by the American College of Emergency Physicians.
Health systems need to consider whose job is it to worry about the specific problems relating to accounts receivable derived from increasing patient responsibility. To transform to the needs of the consumer, the CFO requires an individual to look after the organization’s interests – specifically as they relate to patient revenue, new business, and operating models – while contending with disruptive forces in the marketplace.
With eyes firmly on driving revenue and improving the patient experience, CROs can focus on operationalizing changes to the revenue cycle.
Many major health systems operate multi-billion dollar revenue streams. Cash flow and bad debt exposure are at stake if health systems don’t promote people to pay attention to these dimensions of the revenue cycle. Relegating the job to an outsourced relationship is not going to cut it. In fact, it might put the organization at risk financially, and potentially reputationally, as dissatisfied patients take their healthcare needs elsewhere, looking for a more affordable, consumer-friendly way to pay off their obligations.
Health systems need to apply the same rigor they use to collect third-party insurance accounts receivable to the patient-portion of the expanding revenue cycle. But to do it requires a different mindset that the CRO needs to bring to the table. Working with consumers is not a process-driven exercise but an experience-driven exercise. Meeting patients individual needs, consistently, at scale is the challenge. It’s one of the reasons why organizations like VisitPay are so vital; they bring a wholly professional approach to the consumer finance experience that exists outside of healthcare into the industry.
CROs emerging as new leaders in forward-looking health systems
Becker’s Hospital Review highlights the CRO as one of the top 38 hospital and health system C-level roles. In Becker’s RCM Leaders to Know Series, Ron Wachsman, Chief Revenue Officer at Memorial Hermann Health System, says the CRO role uniquely positions him to take on the patient financial experience. With eyes firmly on driving revenue and improving the patient experience, these individuals can focus on operationalizing changes to the revenue cycle.
Reporting directly to the CFO, chief revenue officers identify opportunities to improve patient collections, drive operating efficiency, build the patient relationship, and represent Finance on the health system’s patient engagement consulting team.