HIM: The Underrated and Seldom-stated Driver of Revenue Cycle Success
Gail Anderson and Mal Underwood
No single process is more critical to effective revenue capture than health information management (HIM). Because the revenue cycle both begins and ends with medical records, a well planned reengineering of HIM processes yields measurable overall improvements in revenue cycle performance. Nonetheless, many organizations continue to undermine their entire revenue cycle by underrating the importance of HIM processes.
Across the country, many facilities have sought to make positive improvements in their revenue cycle process flows, particularly in the areas of patient financial services (PFS) and patient access. These improvements are generally the result of a detailed evaluation of existing practices, a thorough understanding of needed changes, and the proper implementation of performance improvement measures. Despite these well intentioned efforts, however, many facilities often struggle to incorporate HIM enhancements, thus failing to benefit from HIM’s significant contribution to the revenue cycle. Too often, the only effort made to address HIM is a heightened focus on the management of the Did Not Final Bill (DNFB) report.
Because the medical record is the foundation for all billing and revenue capture, any attempt to optimize the revenue cycle logically must begin with the careful assessment and reengineering of HIM practices.
This will not only support optimal revenue capture but will also lead to the improved efficacy and safety of the patient record, improved clinical and business operations, and will ultimately help position HIM as a proactive driver of the revenue cycle.
Once current HIM practices and needs have been thoroughly assessed, an interdisciplinary environment that spans the entire operational continuum must be created. This process requires the reengineering of all areas related to HIM to assure that information is effectively recorded at every stage—from patient access through final billing—and to assure that all data is made accessible to those who need it.
An important part of the reengineering process is making sure that both information systems and personnel are working with the new process, not against it. Appropriate use of all information systems as well as selective hiring and training are essential to unlocking HIM’s contribution to the revenue cycle.
Once a system is in place, a healthy revenue cycle can only be achieved and sustained if efficient practices are maintained through continuous monitoring and benchmarking of key metrics throughout the HIM process.
Traditionally, the industry has generally been slow to include the HIM department in its definition of the revenue cycle. Organizations are now realizing that the revenue cycle is not a standalone financial process composed of a front end and back end, but that HIM—the territory that stands between the front end and back end—can become a major driver.
Recent trends are causing increasing numbers of healthcare facilities to recognize the importance of carefully managed HIM processes, as well as HIM’s role in keeping a facility competitive in today’s marketplace.
National and regulatory trends in public reporting, deployment of Web sites featuring care comparisons by outcome and cost, and pay-for-performance initiatives have dramatically escalated the importance of aggregating, analyzing, and reporting accurate statistical data, both internally and externally.
Proactive management of continual process improvement and benchmarking against national best practice standards has risen in prominence and recognition throughout the industry as a major contributing factor in becoming and remaining a top-ranked institution in comparison databanks and in pay-for-performance areas.
Healthcare facilities must now pay attention to a number of new external and internal HIM-related pressures that can adversely affect the revenue cycle. External pressures include increased competition among healthcare facilities; the Balanced Budget Act, which can cause a reduction in revenues; fraud and abuse can lead to non-covered charges; continually changing Ambulatory Payment Classifications (APCs) for Outpatient Prospective Payment System (OPPS) facilities can result in limited reimbursements; and complicated managed care contracts can increase bad debt due to non-reimbursed charges.
In addition, internal pressures weigh on facilities, including inefficient claims processing; rejections/denials and late payments that result in increased collection costs; rising operational costs and increased full-time employee workload expectations; and disparate information systems which hinder timely access to information.
Successfully reengineering the HIM process begins with a strategy that focuses on the long-term resolution of problems. Part of this strategy includes developing appropriate policies and procedures to support continued monitoring and quality improvement.
Any strategy that is to be effective, however, must not only address known issues and measure progress, but must also allow for open communication and an appropriate balance of the people, processes, and technology involved in successful HIM reengineering.
From the outset, a successful strategy clearly communicates well defined goals to all staff involved and states how every area of the organization will play a role in the overall plan. It is important that all involved are committed to the new strategy and become true stakeholders from the beginning.
To address process issues, a thorough review of all current processes is necessary. By using flow charts to track all current processes, issues such as bottlenecks and redundant tasks can be identified, and solutions can be studied. In determining recommendations, it is important to involve a cross-section of all stakeholders by assembling an interdisciplinary team or teams.
An assessment of current technology must also take place. This should include the evaluation of current software releases and a review of exactly how existing systems are being used. In addition, maintenance and update procedures should be assessed, with appropriate recommendations being made to resolve any issues identified in the process.
During the initial stages of the reengineering process, employees should continually be involved as teams to define the process and to help resolve issues and implement changes. Once the assessment and planning phases are complete, employees must remain involved not only through their own roles in the newly engineered process, but also by understanding the overall strategy and how their work fits into the big picture.
Some ways of keeping communications open between different stakeholders include regular meetings between managers of HIM, revenue cycle, and patient access. In addition, updates and status reports must be passed on to all staff, including physicians. Other techniques for open communications include pairing employees from different departments. Coders and billers can be paired by account type, for example, to encourage interdepartmental communication and cooperation. An interdisciplinary team should also be established to identify, address, and resolve long-term issues and to deal with new problems as they arise.
Primary to the success of any HIM initiative, monitoring of progress must take place from the outset. In the initial stages, realistic goals should be established and checkpoints defined to keep the reengineering process moving and on schedule. When problems arise, clearly defined plans targeting these areas should be created to appropriately revise processes.
Benchmarking and monitoring must continue indefinitely to assure smooth operations. Over the long run, determining a baseline and continually benchmarking select HIM metrics positions an organization as a top performer, improves both external and internal reporting, and ultimately contribute to a healthier revenue cycle.
Some appropriate benchmarks include:
With realistic shared goals in place and continuous monitoring of established benchmarks, reengineered HIM processes can produce a number of quantitative and qualitative benefits that ultimately contribute to an organization’s bottom line and bolster competitive advantage.
Quantitative benefits include improving and accelerating up-front cash collections by 50 percent or more, and reducing the number of days claims remain in accounts receivable. In addition, newly gained efficiency can increase the number of “clean” claims, reducing denials from 10–50 percent, and can decrease bad debt by 5–25 percent. Effective HIM reengineering can also improve resource utilization by 25–30 percent.
In terms of qualitative results, a properly executed HIM reengineering can improve overall communication and help define and align staff members’ roles and responsibilities. Well-defined responsibilities and the careful implementation of best practices will bring about heightened accountability and enhanced performance. As a result of clearly defined roles and responsibilities, more efficient operations, and a sense of involvement, staff and physicians often exhibit improved morale.
HIM reengineering also brings a greater focus on value-added tasks, which can contribute to improved operational infrastructure and efficiency. In addition, a carefully executed integration of HIM practices in the overall revenue cycle helps align information systems, which can benefit a facility for years to come.
Ultimately, all of these qualitative benefits can add up to a more effective healthcare facility and directly contribute to improved patient satisfaction, improving competitive advantage over the long run.
As industry recognition of HIM as a major driver in the revenue cycle process increases, it will become increasingly important for the HIM department’s territory to expand beyond its traditional focus on assembly, analysis, coding, and chart tracking.
Technology developments, including the presidential mandate to move to the electronic medical record (EMR), and the drive toward computerized physician order entry (CPOE) have already impacted these traditional MRD operations nationwide. To ensure continued success, healthcare facilities need to eliminate the climate of managing to survive and build a climate of managing to thrive, by recognizing HIM’s importance in the revenue cycle and capitalizing on it.
American Health Information Management Association (AHIMA) e-HIM Task Force Report (2003), A Vision of the e-HIM Future.
Joint Commission on Accreditation of Healthcare Organizations
Joint Commission on Accreditation of Healthcare Organizations.
Centers for Disease Control and Prevention, National Center for Health Statistics, National Vital Statistics. “Information for Health: A Strategy for Building the National Health Information Infrastructure.” Washington, DC: November 15, 2001.
Maschger, JD. (2003) “The Role of Health Information Management within the Revenue Cycle.” Westchester, IL: HFMA.