revenue cycle in the world of commoditized healthcare
DESCRIPTION
This presentation provides insight into the future of revenue cycle issues as healthcare services and products become more commoditized - a good thing if you're a patient - not so great if you're a provider unless you're prepared to respond to the challenge.TRANSCRIPT
![Page 1: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/1.jpg)
Revenue Cycle in The World of Commoditized Healthcare
May 1, 2014
Sheldon [email protected]
(248) 613-7166
![Page 2: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/2.jpg)
If you remember just one thing…..
Your next CFO isn’t coming from the health industry.
Your next CFO is coming from industrial USA.
![Page 3: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/3.jpg)
Great news!
•Everything’s getting better •And cheaper•And more accessible
![Page 4: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/4.jpg)
Bad News….
![Page 5: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/5.jpg)
Our healthcare “insurance” timeline
1940s
1950s
1970s
1990s
2000s1960s
1980s
![Page 6: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/6.jpg)
Expansion of healthcare “industry"
![Page 7: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/7.jpg)
The Good
• Development of new “stuff”• Procedures• Drugs • Cures• (1974 – 2010) # patents for drugs &
surgical innovations increased by a factor of 6 per NEJM
![Page 8: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/8.jpg)
The Bad
• “Too much” spending?
• Not “too much”, just unpredictable
$14B
$6B$2B $8B
![Page 9: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/9.jpg)
The Ugly
• Efforts to control exploding healthcare spend • Copays ($1→$5→$10, $10→$20→$40)• Deductibles ($500→$1,000→$5,000)• Squeezing providers• HMO, PPO, ACO, ABC, 123
• Result: exploding healthcare spend
![Page 10: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/10.jpg)
A funny thing happened along the way
![Page 11: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/11.jpg)
Cost reduction over time
Attributes of a “commodity”
Quality predictable even if variable
Availability – it’s everywhere
Convenience – it’s easy to get
Replicable – “anyone” can do it
![Page 12: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/12.jpg)
We see this every day
![Page 13: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/13.jpg)
We see this every day
![Page 14: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/14.jpg)
“Commodity” services
• Podiatry• Dermatology • Obstetrics • Orthopedics• Oncology• Gastroenterology ………
It’s hard to make a wrong decision
![Page 15: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/15.jpg)
2013 Study – How patients choose Drs
Medical Retail
Acceptance of insurance plan
Cost
Bedside manner/empathy Customer service
Proximity of office to home, work, or school
Location
Convenient office hours Store hours
![Page 16: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/16.jpg)
Effects on revenue cycle
• Charges/pricing• Your customers• Pricing models• Retail-like offers
• Payment trends• Payer views• Patient views• Unexpected pluses
• Customer service • Patient expectations
![Page 17: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/17.jpg)
New contracting models
• Payers shifting risk to providers• ACOs, bundled payments, reference pricing• Allows providers to make their own rules• Driving simplification to improve profitability• Telehealth • (All this could eliminate the need for what we just built)• Effects on revenue cycle driven mostly by these models
– but not exclusively
![Page 18: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/18.jpg)
Effects on revenue cycle
• Charges/pricing• Your customers• Pricing models• Retail-like offers
• Payment trends• Payer views• Patient views• Unexpected pluses
• Customer service • Patient expectations
![Page 19: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/19.jpg)
Who’s your customer?
• Financial responsibility• Payer – contracts, big bills• Patient – copays/deductibles
• Increasing for decades• HSA/HRA/FSA/Cash
• Buying decision • Payer – defines benefits(network)• Patient – decides where to buy
![Page 20: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/20.jpg)
Charges/pricing models
• Simplification• Easier for customers (payer & patient)• Easier for provider to manage
• Fixed priced models open doors• Ability to offer discounts/coupons/packages
• Capture costs in addition/instead of fees
![Page 21: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/21.jpg)
Customer pricing
→
![Page 22: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/22.jpg)
Simplified Pricing Models - Payer
• Shifting risk downstream thru packaged pricing• ACOs – longitudinal care• Bundled payments – episodic care• Reference pricing
• What does the provider get in return for taking risk?• Better payment terms (in advance!)• Administrative simplification (no claims)• Preferred patient referrals
![Page 23: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/23.jpg)
Simplified Pricing Models - Payer
• Reference pricing• Payer limits its payments (e.g., $10,000)• Patient may opt to pay difference (e.g., $2,000)• How will you bill the patient for the $2,000?• What extras will you offer?
• Telehealth• Charging a patient you never “see”
![Page 24: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/24.jpg)
Simplified Pricing Models - Patient
• Patient paying 1st dollar makes packages easier • High deductible policies• Packaged pricing
• Creative care packages• Ex: “routine” visit & diagnostic tests• Ex: ortho follow up – exam & PT test• Think lifetime free rotation & alignment
• Concierge care• Selling access/priority/off-hours care
![Page 25: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/25.jpg)
Simplified Pricing Models - Patient
• Discounts/specials• $25 screenings this week only• Cardiac panel for an extra $10
• “Frequent fliers”• Promotion for meeting a goal• Weight loss, cholesterol level
• Referral fees/gifts• Gym memberships/personal trainer• Weight loss program fee• Spa/massage
![Page 26: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/26.jpg)
Simplified Pricing Models - Patient
•Your own drug program• Limited formulary• $0 copay
•Regulatory/contract challenges• Waiving copays
![Page 27: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/27.jpg)
Cost Capture
• Capture costs in addition/instead of fees• Current model is charge capture in
order to generate claims• Now we need to capture costs in
order to measure margin
![Page 28: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/28.jpg)
Other Issues
• No-charge visits• Software/workflow changes?• Affects on analytics
![Page 29: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/29.jpg)
Effects on revenue cycle
• Charges/pricing• Your customers• Pricing models• Retail-like offers
• Payment trends• Payer views• Patient views• Unexpected pluses
• Customer service • Patient expectations
![Page 30: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/30.jpg)
Payments - Payer
• Global/bundled payments• PMPM, single episodic payment • Allocations• Effects on analytics
![Page 31: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/31.jpg)
Payments - Payer
• Progress payments• Typically for episodes• Ex: ½ at onset, ½ at completion
![Page 32: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/32.jpg)
Payments - Payer
• Advances• Estimated fees at beginning of each quarter• Billing against a pool of money• Periodic reconciliation
![Page 33: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/33.jpg)
Payments - Payer
• Gainsharing/withholding• Typically part of bundled payments• Fee-for-service along the way• Periodic review/reconciliation
• Result: payment or claw back
![Page 34: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/34.jpg)
Payments - Payer
• “Realtime” transaction processing• Payment authorization• Deductible utilization (non-itemized?)
• Perhaps via the HSA/HRA/FSA
![Page 35: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/35.jpg)
Payments - Patient
• Retail-like experience• Complete transaction at POS• Realtime payer transaction processing
• Authorizes payment “now”• Think credit cards
![Page 36: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/36.jpg)
Payments - Patient
• Retail-lite experience• Internet/PayPal®/Mobile• Storing credit cards• Online payment plans - BillMeLater®
• Also used at POS
![Page 37: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/37.jpg)
Other Issues
• Collection• Need is reduced as more collected at POS• Realtime financing further offloads the issue
![Page 38: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/38.jpg)
Other Issues
• Rejections/pends are reduced/eliminated• Regulatory/contract issues with “discounting/factoring” copays/deductibles
![Page 39: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/39.jpg)
Effects on revenue cycle
• Charges/pricing• Your customers• Pricing models• Retail-like offers
• Payment trends• Payer views• Patient views• Unexpected pluses
• Customer service • Patient expectations
![Page 40: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/40.jpg)
Customer service expectations
![Page 41: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/41.jpg)
Customer service expectations
• Independent of “commoditization”• High availability = 24x7
• Internet availability for questions• Clear view of bills/payments• Including insurance transactions
• Ability to show transactions in various ways• Sort by date, procedure, episode, payment• Filter out non-financial items: rejections, etc.
![Page 42: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/42.jpg)
Customer service expectations
• Responsiveness• Phone: hold times, call-back delays• Email: responsiveness, HIPAA• Online chat: responsiveness, HIPAA• Skype, Facetime, etc: HIPAA
![Page 43: Revenue cycle in the world of commoditized healthcare](https://reader038.vdocument.in/reader038/viewer/2022110309/5587c6cad8b42ae8278b4721/html5/thumbnails/43.jpg)
Brief notes on cost management
• This is new to healthcare• Key to profitability